advantages and disadvantages of micro...

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ADVANTAGES AND DISADVANTAGES OF MICRO, SMALL AND MEDIUM COMPANIES

ADVANTAGES AND DISADVANTAGES OF MICRO, SMALL AND MEDIUM COMPANIES

December 2011

/ INTRODUCTION

/ 1. RESEARCH METHODOLOGY

1.1. Research participants

1.2. Division of participants into layers

1.3. Sample allocation

1.4. Quantity summary

1.5. Selection of the enterprises to be surveyed

1.6. Weigh assignment

/ 2. INFORMATION ON SURVEYED POPULATION OF ENTERPRISES AND RESPONDENTS

2.1. Size of enterprises

2.2. Population number by sections of PKD 2007

2.3. Legal form of surveyed enterprises

2.4. Turnover in 2010

2.5. Procedures for the settlement with the Tax Office

2.6. Educational background of owners and management team

2.7. Information on respondents

2.8. Structure of the surveyed population by sex of the owner and managing person

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/ 3. FLUCTUATION TRENDS IN SME OPERATIONS IN 2010-2011

3.1. Revenues, profits, market share – prudent projections

3.1.1. Lesson of the macroeconomic risk

3.2. Slight inclination towards the employment growth, stronger inclination towards

the rise of remunerations

3.3. Non-investment sales growth

3.4. Concern for product innovations

3.5. Low susceptibility to external funding

3.6. SME in 2011 – summary

3.7. Fluctuation trends in SME operations – typology of businesses

/ 4. STRENGTHS AND WEAKNESSES OF SME

4.1. Strategic goals of SME – establishing of entrepreneurial „middle class”

4.2. Strategic goals of SME versus market potential

4.3. Price or quality – revolution in development of the SME competitive advantage model

4.4. Innovations in SME – sector’s dichotomy

4.5. SME capacity – is the size of the Polish market a barrier?

4.6. Low vulnerability of SME to take advantage of the EU Common Market

4.7. Strengths and weaknesses of SME – summary

/ CONCLUSIONS

List of charts

List of diagrams

List of schemes

/ Table of contents

Micro, small and medium enterprises constitute

99.8% of the total number of businesses operating

in Poland. As of 2009, out of the group comprising

1.67 million active businesses, barely 3.11 thousand

were large companies1.. Micro, small and medium

enterprises (SME) form a sector dominated by mi-

cro businesses hiring up to 9 workers. They make

96% of the entire SME population. These results

exceed the EU average, where micro enterprises

account for 91.8% of total SME2. In 2009, the

number of small businesses3 (10-49 employees)

and medium companies (50-249 employees) in

Poland reached 50.2 thousand and less than

16 thousand, respectively. The remaining part of

over 1.6 million contributed to micro businesses.

According to the data the Polish Central Statistical

Office (GUS) collected for CBOS for the purposes

of this survey, out of 1.67 million SME, nearly

920 000 were recognized as enterprises employ-

ing at least one worker (meant as employers).

The dominant section of the SME sector included

trade companies with the share of over 30%.

Industrial and building organizations constituted

11% and over 13% of the entire population, respec-

tively. Other 45% of SME were the businesses op-

erating in various areas within the service sector4.

In 2009, SME generated 48.4% of GDP, including

30.4% accounting for micro businesses, 7.9% for

small enterprises and 10.1% for medium enter-

prises. Large enterprises produce nearly 24% of

GDP. In total, the enterprise sector created 72.3%

of GDP as of 20095.

Back in 2009, the enterprise sector hired 6.5 mil-

lion employees, out of which 4 million persons

were employed in the SME sector, comprising 1.36

million (20.8%) in micro businesses, a slightly over

1 million (16.1%) in small companies, and more

than 1.6 million (24.5%) in medium companies.

The total percentage of individuals working in the

SME area amounted to 61.4% of the total staff

hired in enterprises. Yet, in fact, the number of

employees serving in SME exceeded 6.2 million,

as the hired persons also covered employers, self-

employed, members of their families.

The large enterprises reported a slight difference

as the number of employees ranged at 2.54 mil-

lion, i.e. 38.6% of the total staff in the enterprise

sector6. These companies hired 2.6 million work-

ers. In total, the enterprise sector employed

8.8 million individuals.

In 2009 enterprises invested PLN 143.7 billion,

with 48% contributed to the SME sector. 15.2%

(PLN 21.8 billion) were provided for investments

into micro businesses, 11.4% (PLN 16.4 billion)

– into small enterprises and 21.4% (PLN 30.8

billion) – into medium enterprises7.

Poland is full of enterprises - natural persons.

According to the Polish Central Statistical Office

(GUS) they constitute 92.1% of total SME8. Enter-

prises meant as legal persons make 7.9%. Enter-

prises - legal persons make 5.6% of the group

of micro businesses, 55.5% of small companies,

85.1% of medium companies9.

Pursuant to the Polish Central Statistical Office

(GUS), for majority of SME the base of settlement

with the Tax Office is a revenue and expense

ledger. It is applied by nearly 65% of SME. More

than 20% of SME uses a revenue registry and 5.2%

– the flat rate tax. Ledgers are kept by 9.6% of

SME (only 6.8% of micro businesses, however as

much as 70.3% small enterprises and over 98% of

medium enterprises)10.

SME are not as effective as large companies –

a single person operating in this sector generates

roughly 50% less of added value as compared to

the person working for the large enterprise sec-

tor11. The smaller the company, the more favorable

this relationship is. Moreover, SME make consider-

ably less investments considering a unit added

value than large businesses12. They are also less

innovative as their expenditures for innovative

operations (excluding micro businesses) in 2009

constituted barely 21.6% of total spendings of

small, medium and large companies13.

E.F.Schumacher (an English economist from

1970-ies) claimed that “little is beautiful”14. He

reckoned that the enterprise operating on a small

scale meant a greater stability to the company

itself and thus for the economy. The European

Commission supports this thesis and persuades all

EU states to bolster small and medium compa-

nies. It is believed that they generate the largest

number of workplaces. The economic crisis proved

that smaller companies handle difficult situations

more efficiently, they are more flexible, adjust to

variable conditions more rapidly as compared to

huge businesses. Furthermore, opposite to large

companies, their financing is based on own funds

and therefore, in the event the access to external

money funding is limited, it may affect essentially

surviving on the market, upholding the employ-

ment level or taking advantage of opportuni-

ties that also appear in the period of economic

downturn.

/ INTRODUCTION

1 Operation of non-financial enterprises in 2009, Polish Central Statistical Office (GUS), 24.03.2011. 2 Eurostat.3 Operation of non-financial enterprises in 2009, Polish Central Statistical Office (GUS), 24.03.2011. 4 Ibid. 5 Report on the SME condition in Poland, PARP 2011.6 Operation of non-financial enterprises in 2009, Polish Central Statistical Office (GUS), 24.03.2011. 7 Ibid., own calculations. 8 Operation of non-financial enterprises in 2009, Polish Central Statistical Office (GUS), 24.03.2011. 9 Ibid., own calculations. 10 Ibid., own calculations. 11 Ibid., own calculations. 12 Ibid., own calculations. 13 Innovative operations of enterprises in 2006-2009, Polish Central Statistical Office (GUS), 09.02.2011. 14 E. F. Schumacher, Little is beautiful, PIW 1981.

99.8%of all enterprises constitute micro,

small and medium enterprises

96.0% of SME comprises micro businesses

48.4% PKB GDP generated

by SME in 2009

4 million personsemployed in SME

in 2009

61.4% of total staff in SME

PLN 143,7 billion investments

of SME in 2009

92.1% of all enterprises – natural persons

p. 5

ADVANTAGES AND DISADVANTAGES OF SME

Introduction

p. 7

1RESEARCH METHODOLOGY Research participants / 1.1

Division of participants into layers / 1.2

Sample allocation / 1.3

Quantity summary / 1.4

Selection of the enterprises to be surveyed / 1.5

Weigh assignment / 1.6

1.1 / Research participants

The participants of the research composed of active private enterprises in selected sections

of Polish Classification of Activity PKD 2007:

1. Section C – production

2. Section E – water supply, sewage and waste management and operations related to restoration

3. Section F – construction

4. Section G – wholesale and retail activities

5. Section H – transport, warehouse management and connections

6. Section I – business activities related to accommodation, catering

7. Section J – information and communications

8. Section L – real estate services

9. Section M – professional, scientific and technical operations

Entities subject to the survey have been divided into three groups depending

on the number of employed:

1. – entities with the staff of 2-9



The quantity sample has been based on the data received from

the Polish Central Statistical Office (GUS).

Chart 1. Number of entities participating in the research, according to GUS in 2011, by number of employed and selected sections of PKD 2007

Section PKD 2007

Entities with the staff of Total %

2-9 10-49 50-249

C 106 417 29 648 7 080 143 145 15.57

E 3 320 877 159 4 356 0.47

F 110 730 16 260 2 020 129 010 14.03

G 366 851 31 087 3 360 401 298 43.66

H 51 295 4 841 611 56 747 6.17

I 48 294 5 347 299 53 940 5.87

J 21 688 2 423 329 24 440 2.66

L 24 120 2 409 469 26 998 2.94

M 73 549 5 274 466 79 289 8.63

Total 806 264 98 166 14 793 919 223 100.00

% 87.71 10.68 1.61 100.00

15 Description of the research methodology prepared by J. Kalka, CBOS.

Source: J. Kalka, CBOS.

15


1. Research methodology

p. 9p. 8

Chart 2. Number of entities participating in the research, according to GUS in 2011, by provinces

Province Number of entities %

01. dolnośląskie 71 753 7.81

02. kujawsko-pomorskie 43 263 4.71

03. lubelskie 38 277 4.16

04. lubuskie 22 483 2.44

05. łódzkie 63 553 6.91

06. małopolskie 81 039 8.82

07. mazowieckie 163 455 17.78

08. opolskie 20 888 2.27

09. podkarpackie 32 898 3.58

10. podlaskie 19 061 2.07

11. pomorskie 55 964 6.09

12. śląskie 120 819 13.14

13. świętokrzyskie 29 076 3.16

14. warmińsko-mazurskie 23 812 2.59

15. wielkopolskie 91 046 9.90

16. zachodniopomorskie 41 836 4.55

Total 919 223 100.00

1.2 / Division of participants into layers

The divisions, that have been assumed, resulted in 432 layers:

3 employment categories x 9 PKD sections x 16 provinces.

1.3 / Sample allocation

Due to vast disproportions in the number of enterprises within selected groups (par-

ticularly in the case of number of employed and PKD sections), a proportional sample

allocation would not enable to achieve the sample size, allowing for drawing appropri-

ate and legitimate conclusions on the population within sections assumed to be ana-

lyzed. Thus the non-proportional sample allocation taking into account both statistical

data and analysis capabilities following the survey has been assumed. The allocation

method has also taken into consideration minimization of weighs for the sample having

been conducted.


Chart 3. Scheduled sample size by section of PKD 2007 and groups of number of employed

Section of PKD 2007

Entities with the staff of: Total %

2-9 10-49 50-249

C 87 120 83 290 19.33

E 16 18 16 50 3.33

F 87 91 42 220 14.67

G 131 115 54 300 20.00

H 66 60 24 150 10.00

I 61 59 20 140 9.33

J 42 40 18 100 6.67

L 40 39 21 100 6.67

M 70 58 22 150 10.00

Total 600 600 300 1 500 100.00

% 40.00 40.00 20.00 100.00

Chart 4. Scheduled samples size by provinces

Province Number of entities %

01. dolnośląskie 113 7.53

02. kujawsko-pomorskie 84 5.60

03. lubelskie 76 5.07

04. lubuskie 67 4.47

05. łódzkie 89 5.93

06. małopolskie 119 7.93

07. mazowieckie 182 12.13

08. opolskie 55 3.67

09. podkarpackie 74 4.93

10. podlaskie 56 3.73

11. pomorskie 101 6.73

12. śląskie 145 9.47

13. świętokrzyskie 65 4.33

14. warmińsko-mazurskie 69 4.60

15. wielkopolskie 125 8.33

16. zachodniopomorskie 80 5.33

Total 1 500 100.00




p. 11p. 10

1.4 / Quantity summary

Number of entities to be surveyed within particular layers have been noted down in

quantity summaries provided for certain provinces.

Chart 5. Sample quantity summary (for Dolnośląskie province)

Section of PKD 2007

Number of enterprises to be surveyed with the number of staff of

2-9 10-49 50-249

C - Industrial processing 7 8 6

E - Water supply, sewage and waste management and restoration

1 1 1

F - Construction 7 7 3

G - Wholesale and retail activities, repair of motor vehicles

10 8 4

H - Transport and warehouse management 5 4 2

I - Accommodation and catering 6 5 1

J - Information and communications 4 3 1

L - Real estate services 3 3 1

M - Professional, scientific and technical operations 6 5 1

Total 49 44 20

Sample sizes provided for analyzing have not always been achieved. In general,

differences between anticipated and accomplished sizes in particular layers have been

slight, ranging from 1 to several cases.

1.5 / Selection of the enterprises to be surveyed

The in-field pollers have picked enterprises, basing upon the content of the quantity

breakdown and recommendations contained in the guidelines. The guidelines

comprised principles of sample differentiation depending on the location class:

a. no more than 60% and no less than 30% of the quantity for a particular province

(considering each of the three employment categories on a separate basis) could

have been conducted in the cities of 100 000 and 100 000+ of inhabitants,

b. a minimum one questionnaire should be carried out in the countryside and one

questionnaire – in the cities of up to 20 000 of inhabitants,

c. the remaining part of the quantity for certain samples for a particular province

should be carried out in the cities of 20 000–100 000 of inhabitants.

Pollers used „Panorama Firm” and „Kompass” for the selection purposes.


1.6 / Weigh assignment

Three weighs have been elaborated:

1. for particular groups in terms of the number of employed

(by the sections of PKD and provinces),

2. for particular sections of PKD (by groups in terms of the number

of employed and provinces),

3. total sample (by groups in terms of the number of employed, sections of PKD 2007

and provinces).

In order to determine weighs of certain categories of the analyzed sample and its

variations (subsamples), the following algorithm has been assumed:

where:

Wpk– weigh in the p sample (subsample) for entities assigned to k category,

LOpk– expected size for k category of the p sample (subsample),

Lpk– number of entities in k category among participants (subpopulation), out of which the p sample (subsample) has been selected out,

LUpk– size of the sample received following performance of the p sample (subsample) in k category,

k – number of the category, k = 1, 2...Kp,

Kp– total number of categories in the p sample,

np– size of the sample carried out in the p sample.

Wpk = LOpk

LUpk



LOpk = Lpk npKp

∑ Lpkk=1

p. 13

2INFORMATION ON SURVEYED POPULATION OF ENTERPRISES AND RESPONDENTS Size of enterprises / 2.1

Population number by sections of PKD 2007 / 2.2

Legal form of surveyed enterprises / 2.3

Turnover in 2010 / 2.4

Procedures for the settlement with the Tax Office / 2.5

Educational background of owners and management team / 2.6

Information on respondents / 2.7

Structure of the surveyed population by sex of the owner and managing person / 2.8

2.1 / Size of enterprises

In order to select three groups of enterprises, including micro, small and medium com-

panies, one criterion has been used out of several ones applied collectively in the EU to

define the SME sector16 (SME – micro, small and medium enterprises) – the number of

employed.

As for the group of micro businesses, the survey covered barely the companies that hire

at least one employee (minimum 2 persons, along with the owner, work for a particu-

lar company). The research did not enclose self-employed persons, not considered

employers.

Chart 6. Number of enterprises subject to the survey by size and their share in the total population having been examined (raw data)

How many employees are hired in your company on a basis of the labor contract?

N %

2-9 employees 628 41.8

10-49 employees 598 39.8

50-249 employees 275 18.3

Total 1 501 100.0

2.2 / Population number by sections of PKD 2007

Chart 7. Number of enterprises subject to the survey by sections of PKD 2007 (raw data)

Population and percentage of enterprises in particular sectors N %

Section C production 293 19.5

Section E water supply, sewage and waste management and operations related to restoration

51 3.4

Section F construction 221 14.7

Section G wholesale and retail activities 299 19.9

Section H transport, warehouse management and connections 150 10.0

Section I business activities related to accommodation and catering services

144 9.6

Section J information and communications 90 6.0

Section L real estate services 97 6.5

Section M professional, scientific and technical operations 156 10.4

Total 1 501 100.0

Source: Report on quantity surveys „The SME sector in Poland”, CBOS 2011.

16 Pursuant to the EU defini-tion, the base allowing for the enterprise to be classi-fied within the SME sector is the number of employed, annual turnover and/ or equity, and capital ties (Recommendation of the European Commission 2003/361/EC of May 6, 2003 related to the definition of micro businesses and small and medium enterprises).



2. Information on surveyed population of enterprises and respondents

p. 15p. 14

2.3. / Legal form of surveyed enterprises

Enterprises – natural persons are a dominant form of business operations in Poland and, according to

the Polish Central Statistical Office (GUS)17, constitute 92% of the total SME population (together with

a one-man business activity that is not covered by the survey). Enterprises – legal persons account for

8%. Enterprises – legal persons make 5.6% of the group of micro businesses, 55.5% of small companies,

85.1% of medium companies18.

Chart 8. Legal form of surveyed enterprises (% share in the examined population)

Legal form of the enterprise %

enterprise conducted by the natural person – entry into the Register of Entrepreneurs

72,3

private partnership 12,4

limited liability company 7,8

registered partnership 5,5

joint stock company 6.0

professional partnership 4.0

limited partnership 1.0

other form 9.0

Total 100.0

2.4 / Turnover in 2010Businesses operating in the SME sector are reluctant to reveal their financial results, even if it refers to

fundamental data such as the annual turnover. Nearly ¼ of the surveyed entities refused to respond to

the question concerning not a particular value of the turnover, yet its range in 2010. Therefore, there are

no prerequisites to adjust the size of three group of enterprises (micro, small, medium) selected to be

surveyed basing upon the employment volume, using an additional criterion of the turnover.

Chart 9. Turnover (range) of surveyed enterprises in 2010

Should you please indicate the range of the turnover in your company in 2010

%

up to EUR 0.2 millon 52.2

EUR 0.2 million to EUR 0.5 million 13.4

EUR 0.5 million to EUR 1 million 4.8

EUR 1 to EUR 2 million 4.4



EUR 50 million 0.1

answer refused 22.1

non applicable (the company was set up in 2011) 0.7

Total 100.0

Source: Report on quantity surveys „The SME sector in

Poland”, CBOS 2011.

17Operation of non-financial enterprises in 2009, Polish

Central Statistical Office (GUS), 24.03.2011.

18Ibid., own calculations.


19 Ibid., own calculations.




2.5 / Procedures for the settlement with the Tax Office

According to the Polish Central Statistical Office (GUS), the revenue and expense ledger

are in majority of cases a basis for tax settlements with the Tax Office provided for SME

(all SME along with companies hiring the staff, which are not subject to this survey) – it

has been used by nearly 65% of SME. More than 20% of SME apply the revenue registry

and 5.2% use the flat amount tax. 9.6% of SME keeps accounting ledgers (barely 6.8% of

micro businesses, however as much as 70.3% of small companies and over 98% of medium

companies)19.

Chart 10. Procedures for the settlement with the Tax Office referring to enterprises subject to the survey

Procedures for settlement with the Tax Office %

revenue and expense ledger – progressive tax (18% and 32%) 31.8

revenue and expense ledger – flat rate tax (19%) 36.4

accounting books – progressive tax (18% and 32%) 6.0

accounting books – flat rate tax (19%) 13.2

flat amount tax 2.4

lump sum 5.6

accounting books for legal persons 4.6

answer refused 0.0

Total 100.0

2.6 / Educational background of owners and management team

The majority of owners hold a high school diplomas. A bit more than 1/3 of SME owners

have college and university degrees. Over 1/8 of entrepreneurs received elementary and

vocational education.

Chart 11. Educational background of owners of enterprises subject to the survey

What is the educational background of your company’s owner?

%

high school 46.7

university degree (BA, MA) 34.1

elementary and vocational 12.8

PhD and higher 3.6

incomplete elementary 0.4

non applicable – the business is the company and its shareholding structure is scattered or the government is the majority stakeholder

2.0

answer refused 0.4

Total 100.0



p. 17p. 16

The structure of persons in charge of management in the enterprises subject to the survey by educa-

tional background resembles the owners’ structure assessed basing upon the criterion of education.

Chart 12. Educational background of the management team of enterprises subject to the survey

What is the educational background of the person managing your company (supervisor, CEO)?

%

high school 48.1

university degree (BA, MA) 36.9

elementary and vocational 11.9

PhD and higher 2.7

incomplete elementary 0.1

the management team consists of more than 1 person 0.0

answer refused 0.4

Total 100.0

2.7 / Information on respondents

The poller was allowed to interview several individuals within one company, who were familiar with a particular

field. In practice, the respondents were mainly owners or co-owners of enterprises.

Chart 13. Position of the respondent in enterprises subject to the survey

Respondent’s position %

owner 66.7

co-owner 21.6

CEO/director 2.9

vice president/deputy director 0.9

CFO 0.3

executive/production director 0.4

commercial director 1.7

chief accountant 3.7

other 6.9

Who? including

accountant 0.2

HR specialist 0.2

member of the management board, proxy, commercial proxy, etc.

0.7

director of other departments 0.0

Manager of Commercial Department 0.0

manager and specialist of other departments (e.g. manager of drugstore, plant, office center, laboratory, etc.)

5.5

founder of the companies, subsequent co-owner 0.4

member of the supervisory board 0.0





2.8 / Structure of the surveyed population by sex of the owner and managing person

The entire population subject to the survey was divided into groups by the sex. Three cat-

egories of the companies were selected out:

1. female companies – the owner and managing person are women (or a woman, if the

owner is simultaneously a managing director),

2. male companies – the owner and managing person are men (or a man, if the owner

is simultaneously a managing director),

3. mixed companies – the owner is a woman and the managing person is a man,

and the owner is a man and the managing person is a woman.

Chart 14. Number of enterprises subject to the survey by the sex of the owner and managing person (% of SME)

Sex of the owner and the managing person %

female companies – the owner and managing person are women (or a woman, if the owner is simultaneously a managing director)

27.8

male companies – the owner and managing person are men (or a man, if the owner is simultaneously a managing director)

65.1

mixed companies – the owner is a woman and the managing person is a man, and the owner is a man and the managing person is a woman

7.1

The group of female companies contains 13.6% of enterprises, where the female owner

manages the company at the same time, and 14.2% of them hires the female manager.

The group of male companies contains 27.8% of enterprises, where the male owner man-

ages the company at the same time, and 37.3% of them hires the male manager.

The group of mixed companies contains 4.7% of enterprises, where the owner is a man and

they hire a female manager and 2.4%, which are owned by a woman and managed by a man.

The survey results indicate that owners of enterprises principally pick the person of the

same sex as managers of their companies.

Source: own work basing upon the data of CBOS.

The survey re-sults indicate that owners of enterprises principally pick the person of the same sex as managers of their companies.



3FLUCTUATION TRENDS IN SME OPERATIONS IN 2010-2011 Revenues, profits, market share – prudent projections / 3.1

Lesson of the macroeconomic risk / 3.1.1

Slight inclination towards the employment growth,

stronger inclination towards the rise of remunerations / 3.2

Non-investment sales growth / 3.3

Concern for product innovations / 3.4

Low susceptibility to external funding / 3.5

SME in 2011 – summary / 3.6

Fluctuation trends in SME operations – typology of businesses / 3.7

In 2010 the Polish economy was trudging up on

its way out from the economic slowdown and

the GDP reached 3.8%, following the less-effec-

tive 2009 (1.7%). Medium and large enterprises

increased sales revenues by 5% as compared

to 2009, and, in addition, they enhanced the

turnover profitability and cash flow liquidity.

However, more than 20% of the companies

were facing up considerable difficulties, clos-

ing the year of 2010 with the net loss20. Similar

changes occurred to smaller businesses21.

In 2011 the situation of medium and large

enterprises is far more favorable comparing to

2010 – at the end of Q3 sales revenues soared

up by 12.2%, profitability went up and cash

flow liquidity was maintained at ultimately high

levels. Net financial result reported the highest

value ever (nominally following 3 quarters) and

it might be forecast that the year 2011 will have

been the most profitable one in history.

Nevertheless, the substantial part of companies

fails to record a positive financial result – in

2010, only 21.6% managed to reach it (22.7% in

2009). In 2011 the similar situation is expected,

as Q3 2011 ended up with the value of 27.2%

(27.4% as at end of Q3 2010)22. Probably, paral-

lel trends relate also to smaller businesses23.

/

20 Operation of non-financial enterprises in 2009, Polish Central Statistical Office (GUS), 24.03.2011. 21 Data for the entire enterprise sector, including micro and small businesses are revealed with a ca. 15-month delay, i.e. the Polish Central Statistical Office (GUS) ought to present the results for 2010 and 2011 in March/ April 2012 and March/ April 2013, respectively.22 Financial results of non-financial enterprises in 2010. Financial results of non-financial enterprises in I-IX 2011 and Financial results of non-financial enterprises in I-IX 2010, Polish Central Statistical Office (GUS) 2010 and 2011. 23 See: footnote 21.

3.8% GDP growth in 2010

1.7% GDP growth in 2009

20.0% the percentage of

companies in extremely difficult situation

after 2010

12.2% the percentage of income

increase reported by medium and large

companies

21.1%the percentage of

companies with positive financial result in 2010.

The similar situation is to be expected in 2011

p. 19


3. Fluctuation trends in SME operations in 2010-2011

Market share

Profit

Sales revenues

28.6 33.1 38.2

29.6

0 20 40 60 80 100

Significant growth/growth

Significant drop/ drop

36.0

Status quo

34.4

Non applicable

20.1 56.8 22.7

Medium (50-249)

Small (10-49)

Micro (2-9)

40.3 33.7 26.0

28.0

0 20 40 60 80 100

36.3 35.7

51.2 28.3 20.4


Significant drop/ drop Status quo Non applicable

30.3 56.8 12.9

18.7

0 20 40 60 80 100

57.1 24.2

37.2 50.6 12.2

Medium (50-249)

Small (10-49

Micro (2-9)



35.1 34.1 30.8

27.4

0 20 40 60 80 100

33.2 39.4

43.7 28.4 27.9

Medium (50-249)

Small (10-49)

Micro (2-9)



31.4 41.4 27.3

33.0

0 20 40 60 80 100

42.6 24.5

23.3 58.0 18.1

Market share

Profit



Sales revenues

45.0 38.6 16.4

30.9

0 20 40 60 80 100

43.4 25.8

58.1 31.5 10.4

Medium (50-249)

Small (10-49)

Micro (2-9)



31.5 60.5 8.1

22.2

0 20 40 60 80 100

58.1 19.7

42.5 50.5 7.1

Medium (50-249)

Small (10-49)

Micro (2-9)



39.1 43.8 17.1

29.9

0 20 40 60 80 100

41.3 28.8

52.3 30.9 16.8

Medium (50-249)

Small (10-49)

Micro (2-9)



p. 21p. 20

3.1 / Revenues, profits, market share – prudent projections

Note: All diagrams have been elaborated by the author, basing upon the survey carried out under

the project “Monitoring of the SME output in 2010-2012”, co-financed with the EU subsidies within

the European Social Fund, PKPP Lewiatan. If otherwise, the source has been specified below.

Monitoring of the SME output in 2010-2012 ena-

bles to examine the situation of the companies

operating in the SME sector. It proves that the

standing of micro, small and medium businesses

in 2010 had been poor, yet it improved in 2011. In

2010, in terms of net values24, the larger number

of SME had closed the year with the drop in the

sales revenues as compared to those reporting

a growth. In 2011 it did not happen as the

percentage of SME expecting the rise of sales

revenues was nearly 35% higher as compared to

the ones, which anticipated the drop.

As far as the profit fluctuation is concerned,

the situation looks the same, yet not in all the

companies the growth of profit depends on the

sales revenues. It means that the sales revenues,

that some of the businesses managed to increase

in 2010 and 2011, are not reflected in the higher

profit. Undoubtedly, it mostly results from the

significant rise of expenses as compared to

revenues, being the consequence of increasing

prices of raw materials and materials.

An interesting issue is an assessment made by

SME in the course of the survey, that refers to

the changes in the market share – in 2010 some

companies could have increased their market

share at the cost of other, a bit larger group of

businesses. In 2011 nearly 30% of SME announce

the boost of the market share whilst 18% of them

disapprove of their opportunities to uphold the

level from 2010. It means that in the event of

some companies, the expansion of the market

share occurs not only at the expense of other

entities, but also as a result of the market boost.

However, it signifies solely a part of SME is

capable of taking advantage of that growing mar-

ket. The situation of SME has been improving,

however it is greatly diversified, depending on

Diagram 1. Changes in SME operations in 2010 as compared to 2009 (% of SME)

Diagram 3. Changes in sales revenues of SME in 2010 as compared to 2009 (% of SME by the size)

Diagram 7. Changes in SME market share in 2010 as compared to 2009 (% of SME by the size)

Diagram 5. SME profit fluctuations in 2010 as compared to 2009 (% of SME by the size)

Diagram 2. SME forecasts on fluctuation in operations of enterprises in 2011

Diagram 4. SME forecasts of sales revenues in 2011 as compared to 2010 (% of SME by the size)

Diagram 8. SME forecasts of changes in market share in 2011 as compared to 2010 (% of SME by the size)

Diagram 6. SME forecasts of profit fluctuations in 2011 as compared to 2010 (% of SME by the size)

24 Net – a difference between

the percentage of compa-nies reporting the growth

and the percentage of companies reporting the

drop.

The standing of SME is enhan-cing, yet it stron-gly depends on the size of the enterprise.



Professional, scientific and technical operations

Real estate services

Information and communications

Accommodationand catering

Production

Water supply, sewage and waste management, restoration

Construction

Wholesale and retail activities

Transport, warehouse management

37.2

38.3

35.726.0

40.532.327.2

29.2

36.528.0

34.8

37.2

20.1

33.7

46.2

37.934.0

28.2

29.638.931.5

28.9

32.2

39.0

34.3

36.5

26.3

Significant growth/ growth


Status quo

36.4

54.4

31.2

14.4 44.0

22.233.7

27.1

43.519.1

36.9

44.0

15.6

26.9

57.3

56.8

31.8

11.4

22.850.926.4

16.9

38.1

45.0

29.4

32.8

30.8




Accommodationand catering

Production


Construction





Status quo

p. 23p. 22

the size of the enterprise. In the group of micro

businesses it is definitely worse than among

small companies, and, in particular, medium en-

terprises – almost double the number of medium

companies reported sales revenue growth as

compared to micro ones, and they anticipated

continuation of the prosperity in 2011.

Most of all, medium and small companies can

benefit from the better economic situation,

growing consumption and the market boom, in

general. On the other hand, micro businesses are

more efficient in turning increased sales rev-

enues into rising profits (a similar percentage of

micro businesses increases profit when increas-

ing sales). In the event of small and medium

companies (10+) this relation is partially distort-

ed, i.e. some of 10+ businesses sales growth is

reached at higher expenses and is not reflected

in the lift in profits.

Furthermore, rising sales revenues do not trans-

late into greater market share. Yet, these are

micro businesses (72%) and medium enterprises,

which handle this issue in the most efficient

manner (nearly ¾ of those that forecast the

revenue growth in 2011 simultaneously estimate

that their market share will increase, too). In the

case of small companies it refers to 69% of them.

The situation is also quite diversified in particular

sectors of the economy. In 2010 the businesses

operating in accommodation and catering,

industrial and construction areas reported the

relatively slowest development. The year 2011

will still be poorer for SME conducting business

activities in the field of accommodation and

catering as compared to companies from other

industries. Yet, according to majority of entre-

preneurs 2011 will be far better than 2010 – sales

revenues are expected from many more micro,

small and medium enterprises dealing with

information and communications and real estate

services, quite many construction companies and

a bit more businesses operating in other sectors,

than back in 2010.

It is worth to focus on basic parameters describ-

ing fluctuations in enterprises selected out by

the sex of the owner and the managing person.

As in 2010, as in 2011, the group of “female”

companies25 comprised approx. 1/3 less units re-

porting growth of sales , profits and market share

as compared to „male” companies26. Nonethe-

less, “female” companies had a more efficient

cost control as compared to “male” businesses,

since the larger number of them achieved the

profit rise than the sales revenues growth.

Diagram 9. Changes in SME sales in 2010 as compared to 2009 (% of SME by the economy sector)

Diagram 10. SME forecasts on fluctuations of sales revenues in 2011 as compared to 2010 (% of SME by the economy sector)

25 According to the criteria, the „female” companies stand for businesses owned and managed by women (or the female owner is simultaneously the managing person). 26 “Male” companies stand for businesses owned and managed by men (or the male owner is simultaneously the managing person).



24.7 48.2 27.2

23.3

0 20 40 60 80 100

48.1 28.6

17.1 61.3 21.6

Market share

Profit

Sales revenues


Significant drop/ drop Status quo

24.3 31.0 44.7

23.6

0 20 40 60 80 100

32.8 43.5

14.4 55.8 29.7

Market share

Profit

Sales revenues



34.6 39.4 26.1

37.4

0 20 40 60 80 100

39.7 39.7

25.9 57.9 16.2

Market share

Profit

Sales revenues



30.6 35.1 34.3

32.4

0 20 40 60 80 100

37.8 29.8

21.9 58.4 19.6

Market share

Profit

Sales revenues



80

70

60

50

40

30

20

10

0


2004 2005 2006 2007 2009**2008* 2010 2011***


Status quo GDP dynamics (right axis)

32.2 37

.0

30.7 34

.0

46

.7

11.6

48

.1

14.5

73.9

29.6 34

.4

33.0

24.4

2.6

7

6

5

4

3

2

1

0

80

70

60

50

40

30

20

10

0

2004 2005 2006 2007 2009**2008* 2010 2011***

29.7

39.2

29.0

37.2

46

.3

14.8

44

.8

15.6

74.1

28.6

38.2

31.4

27.3

3.6



Status quo GDP dynamics (right axis)

8

7

6

5

4

3

2

1

0

p. 25p. 24

Diagram 13. SME forecasts on fluctuation in operations in 2011 as compared to 2010 (% of SME by the sex – female companies)

Diagram 14. SME forecasts on fluctuation in operations in 2011 as compared to 2010 (% of SME by the sex – male companies)

Diagram 11. Changes in SME operations in 2010 as compared to 2009 (% of SME by sex – female companies)

Diagram 12. Changes in SME operations in 2010 as compared to 2009 (% of SME by sex – male companies)

Diagram 15. Fluctuations of SME sales revenues, SME forecasts on changes of revenues, GDP dynamics in 2004-2011 (% of SME; % of GDP)

Diagram 16. Fluctuations of profit, SME forecasts on profit changes and GDP dynamics in 2004-2011 (% of SME; % of GDP)

It is worth fo-cusing on basic

parameters describing fluctu-ations within en-terprises by sex

of the owner and the managing

person.

3.1.1 / Lesson of the macroeconomic risk

„Monitoring of the SME output in 2010-2012”,

„and previous surveys („Monitoring of the

SME output” conducted by PKPP Lewiatan

in the preceding years) allow to take a closer

look at interdependence between the eco-

nomic growth and fluctuation trends referring

to sales revenues and profits in micro, small

and medium enterprises. The analysis of the

data contained in the surveys carried out in

2004-2011 indicates a correlation between the

economic growth and changes in revenues and

profits in SME (this inter-relation occurs at vari-

ous intensity in 2004-2007 and 2010).

However, the forecast on changes in sales and

profits in 2009 SME had disclosed in the survey

from 200827, as well as GDP for 2009, looked

totally opposite. A strongly optimistic approach

of SME in 2008 related to development op-

portunities of 2009, expressed in the period

showing clear signs that the extremely serious

threat to the expansion makes us assume that

micro, small and medium enterprises could

not have “read” information coming from the

global economy and financial markets, and

therefore estimated the real chances of devel-

opment. The period of economy boom

(2006 – Q2 2008, with the GDP growth ex-

ceeding 6%), when the market was growing

dynamically and did not require special actions

to be taken up by enterprises28 , „dulled” SME

vigilance, did not compel and even encourage

to monitor and analyze the macro environment

and risks it took. The companies were focusing

on their operations.

The majority of SME had never analyzed the

environment before in order to consider the

macroeconomic trends while drawing up

plans for their business activities. They were

interested in, e.g. interest rates, however, on

the moment they looked for a loan, or PLN

exchange rate, when they intended to import

components for manufacturing purposes. SME

Notes to Diagrams 15 and 16:

2008*/ – in the survey of 2008 re-

spondents were not ask to provide

forecasts for the entire 2008.

2009**/ – SME forecasts for 2008

and 2009 (the survey of 2008 was

mostly carried out prior to the

decline of Lehman Brothers).

2011***/ – SME forecasts in mid-

2011 covering the entire year.

Source (Diagrams 15 and 16):

own works: (1) 2004-(2009 expec-

tations) basing upon the research

undertaken in 2004-2008 „Moni-

toring of the SME output” (note:

the survey of 2008 was conducted

within August 25-September 30,);

(2) 2010-(2011 expectations) basing

upon the research carried out un-

der the project named „ Monitoring

of the SME output in 2010-2012”

co-financed with EU subsidies the

European Social Fund.

PKPP Lewiatan; GDP – data source:

Information of the Polish Central

Statistical Office (GUS) on updated

estimation of GDP for 1999-2006,

2007, 2008, 2009, 2010.



28 It has been proved by a substantial decrease of SME inclination for innovations (“Monitoring of the SME output” in 2006-2008, PKPP Lewiain the section dedicated to innovations).

27„Monitoring of the SME output” 2008,

PKPP Lewiatan, was conducted within August 25– September 30, 2008,

i.e. partially following the collapse of Lehman

Brothers.

Remunerations

Employment

13.9

0 20 40 60 80 100

76.8 9.2

33.7 62.5 3.8



24.5 60.3 15.2

12.4

0 20 40 60 80 100

79.3 8.3

29.1 52.8 18.1

Medium (50-249)

Small (10-49)

Micro (2-9)



13.6

0 20 40 60 80 100

77.8 8.3

33.1 63.0 3.7

Remunerations

Employment



22.2 69.6 8.2

12.5

0 20 40 60 80 100

79.2 8.3

25.7 63.1 11.2

Medium (50-249)

Small (10-49)

Micro (2-9)



p. 27p. 26

management lacked in-built mechanisms ena-

bling to monitor the surroundings, the compa-

nies (in most cases) did not recognize things

occurring in the macroeconomic environment

as a potential danger to be tracked. Some

enterprises were hurt badly when it appeared

that instruments meant to protect against the

currency risk – currency options – used for

profit reasons and not guarding revenues and

profit.

Taking into account SME forecasts related to

fluctuations of revenues and profit in 2009,

expectations towards 2011, enclosed in the

From the perspective of the economy and its

ability to sustain the economic growth, key

decisions to be taken by enterprises are related

to employment and remunerations, as they af-

fect attitude of households towards individual

consumption, the main component of the eco-

nomic growth. “Monitoring of the SME output

in 2010-2012” proves that SME are less inclined

to increase employment, yet they simultane-

survey seem to be relatively cautious. Yet the

most important issue is that SME, micro and

small enterprises, in particular, learned how

to use information going beyond their own

revenue and expense ledgers while planning

on business activities. This is not exactly the

risk management, but rather realization of

the existence of a broadly defined macroeco-

nomic risk. This is a first step towards a more

conscious incorporation of the research on

surroundings into planning of operations and,

at least taking into consideration information

on macro environment, while running business

activities.

3.2 / Slight inclination towards the employment growth, stronger inclination towards the rise of remunerations

ously strongly accept the rise of salaries. As

in 2010, as in 2011 SME willingness to expand

the number of staff is relatively low – as little

as 13-14% of the companies increased employ-

ment or declared it had been extended. At the

same time, nearly 2.5 times more of SME rose

or planned to rise the remunerations.

Micro, small and medium enterprises are afraid

of taking on commitments resulting from the

staff hiring, particularly in the perspective of

coming slowdown and, in addition, the fear for

the increase of the disability pension contribu-

tion to be paid by the employer from 4.5% up

to 6.5% as of February 2012. That is why it is

expected that the situation in 2012 will alter.

On the other hand, the human resources are

becoming more crucial in SME operations – the

companies declare that competent, well-

motivated workers are one of the key success

factors. It is ranked 5-th in the group of the

most essential factors contributing to the SME

competitive standing on the market29. Perhaps

that is why entrepreneurs are more frequently

prone to provide salary rise than increase the

number of staff.

However, enterprises from the Pomorskie Prov-

ince act the opposite way. This is a region of

Poland, where both in 2010 and 2011 SME have

decided to enlarge employment as compared to

remunerations. One of the reasons is the sales

growth – this region reports the largest number

of businesses (following SME from the Opolskie

Province) with the sales growth in 2010 and

anticipated boost tendency for 2011. Another

reason is a positive evaluation of the labor mar-

ket conditions. The Pomorskie Province is the

region, in which the largest number of SME in

Poland considers access to the employees hold-

ing required qualifications an asset, and, at the

same time, this is the area, where the least SME

reckon that access to the employees holding

required qualifications is an obstacle hamper-

ing the development (following SME located in

the Lubelskie Province). Moreover, SME from

the Pomorskie Province consist of businesses,

which, comparing to companies from other re-

gions, give the lowest priority to competences

and motivation of the employees as the crucial

element contributing to a competitive standing.

That is probably the reason why more compa-

nies are keen on employment growth than rise

of remunerations.

Micro businesses are extremely afraid of the

employment increase – at generally low inclina-

tion to the labor extension within the entire

SME sector, as little as 1/8 of enterprises oper-

ating in this group rose the number of workers

in 2010 and forecast to rise it in 2011.

Twice as many medium companies were fond of

the employment growth in 2011.

As for remunerations, the situations looks op-

posite, since enterprises, irrespective of size,

are definitely more willing to incur them and

Diagram 17. Changes of employment and remunerations in SME in 2010 as compared to 2009 (% of SME)

Diagram 19. Changes of employment in SME in 2010 as compared to 2009 (% of SME by size)

Diagram 18. SME forecasts on changes of employment and remunerations in 2011 as compared to 2010 (% of SME)

Diagram 20. SME forecasts on changes in employment in 2011 as compared to 2010 (% of SME by size)

29 „Monitoring of the SME output” in 2010-2012”. Analysis of key factors SME base their competitive standing upon, will be discussed later in this Report.



43.9 53.4 2.7

32.5

0 20 40 60 80 100

63.6 3.9

39.7 56.5 3.8

Medium (50-249)

Small (10-49)

Micro (2-9)



2011

2010

30.9

0 20 40 60 80 100

62.6 6.6

34.5 61.7 3.7



2011

2010

9.2

0 20 40 60 80 100

82.3 8.5

9.7 79.8 10.5



Investments in fixed assets modernizing production

capabilities

Investments in fixed assets increasing production

capabilities

22.0

0 20 40 60 80 100

42.3 6.9 28.8

23.5 42.5 5.7 28.1



2011

2010

15.2

0 20 40 60 80 100

75.7 9.0

15.1 78.8 6.1



18.8

0 20 40 60 80 100

49.0 4.0 28.3

21.8 47.2 3.9 27.1

Investments in fixed assets modernizing production

capabilities

Investments in fixed assets increasing production

capabilities



35.3 62.5 2.2

32.9

0 20 40 60 80 100

63.2 3.9

39.5 59.2 1.3

Medium (50-249)

Small (10-49)

Micro (2-9)



2011

2010

35.8

0 20 40 60 80 100

61.9 2.3

33.6 63.6 2.7



p. 29p. 28

Diagram 21. Changes of remunerations in SME in 2010 as compared to 2009 (% of SME by size)

Diagram 25. Changes of remunerations in SME in 2010 as compared to 2009 and forecasts on changes of remunerations in 2011 as compared to 2010 (% of SME by sex – female companies)

Diagram 26. Changes of remunerations in SME in 2010 as compared to 2009 and forecasts on changes of remunerations in 2011 as compared to 2010 (% of SME by sex – male companies)

Diagram 22. SME forecasts on changes in remunerations in 2011 as compared to 2011 (% of SME by size)

differences between micro, small and medium

businesses are not that huge.

Such a tendency will be observed in the Polish

economy in the years to come. Enterprises

continue to highlight explicitly that if they are

supposed to be more prone to hire additional

staff, the authorities have to liberalize the labor

law and quit increasing employment-related

charges.

Male companies are slightly more prone to

extend the number of workers than female

ones, which seem to be more careful in taking

on liabilities towards new employees. Yet, both

group represent clearly their unwillingness to

Expenditures the companies provided for

investments into new fixed assets declined in

2009 and 2010. Data for three quarters of 2011

show a reversal of the negative trend – invest-

ments were higher by 12% as compared to a

corresponding period of 201030, but they did

not return to the level of 2008 so far.

„Monitoring of the SME output in 2010-2012”

indicate that slightly more than 20% of SME

increased investment expenditures in 2010 – it

referred both to those, which stimulated pro-

duction capabilities and modernization invest-

the employment growth. Furthermore, in both

groups it is seen that they are more inclined

to rise salaries than extend the labor force.

However, in the case of male companies, fewer

of them anticipate the remuneration growth in

2011 as compared to those, which expect the

increase of sales and profit. A definitely higher

percentage of female companies plans the sal-

ary rise comparing to those, which expect the

increase of sales and profit. It may point out

that female companies are more susceptible to

share the profit with their workers than male

businesses.

3.3 / Non-investment sales growth

ments. A low investment susceptibility intensi-

fied in 2011. Data of the Polish Central Statistical

Office (GUS) refer to investments in the sector

of medium and large companies

– businesses operating in the SME area. Diver-

gence of information derived from the survey

and the GUS data prove that investment-related

tendencies in small and micro companies have

to differ from those reported in medium and

large enterprises.

Micro companies are far less willing to invest

Diagram 23. Changes of employment in SME in 2010 as compared to 2009 and forecasts on changes of employment in 2011 as compared to 2010 (% of SME by sex – female companies )

Diagram 27. Changes in investment expenditures in 2010 as compared to 2009 (% of SME)

Diagram 24. Changes of employment in SME in 2010 as compared to 2009 and forecasts on changes of employment in 2011 as compared to 2010 (% of SME by sex – male companies)

Diagram 28. SME forecasts on changes in investment expenditures in 2010 as compared to 2009 (% of SME)

30 Financial results of on-financial enterprises in I-IX 2011, Polish Central Statistical Office (GUS) 2011.



23.7 55.9 4.3 16.1

18.0

0 20 40 60 80 100

48.0 3.9 30.1

35.4 51.4 9.04.2

Medium (50-249)

Small (10-49)

Micro (2-9)








Construction

Production


Accommodation and catering

0 20 40 60 80 100

15.0 49.6 4.7 30.6

20.0 41.9 7.1 31.0

16.3 60.7 1.4 21.6

22.0 52.1 4,4 21.5

25.7 52.2 9.1 13.0

18.4 44.1 2.3 35.2

20.3 49.3 6.5 32.9

29.8 42.4 14.8 13.0

16.7 59.3 3.1 20.9



0 20 40 60 80 100

20,8 43,7 3,9 31,7

21,5 47,5 4,5 26,5

20.9 48.7 1.4 29.1

28.2 51.5 5.1 15.3

16.8 56.9 7.2 19.1

21.8 45.4 2.2 30.8

20.5 47.5 6.1 25.8

28.9 30.2 14.7 26.2

23.4 49.1 5.0 22.5






Construction

Production





25.0 53.2 4.4 17.5

21.1

0 20 40 60 80 100

46.4 3.9 28.6

38.7 50.1 7.23.9

Medium (50-249)

Small (10-49

Micro (2-9)



p. 31p. 30

– a relatively high perecentage of entities

operating in this groups does not invest at all

(ca. 30%) and a relatively tiny part of it increase

investment expenditures. The larger the com-

pany, the higher the inclination to investment.

However, the situation in small companies is

quite similar to the approach of micro business-

es. On the other hand, a considerably larger

number of medium companies anticipates

enlargement of investments enhancing produc-

tion capabilities as well as modernizing ones,

as compared to smaller enterprises. It supports

the thesis that operations of medium compa-

nies and decisions they take resemble more the

attitude of large enterprises than small busi-

nesses.

Inclination to investments also depends on the

economy sector, albeit there is no such strong

diversification as in the case of differences be-

tween enterprises of various size. Nonetheless,

a very interesting tendency can be seen here,

as in all sectors of the economy, except for the

transport, enterprises are more prone to make

modernizing investment than go for a “regular”

extension of production capabilities. This trend

manifests, despite a relatively low willingness

of SME to increase investment expenditures,

positive changes within this sector – a focus on

modernization. It is particularly vivid in manu-

facturing companies and businesses operating

in accommodation and catering industry.

A combination of SME susceptibility to rise

investment expenditures with expectations

related to the increase of sales revenues and

profit in 2011 implicates that the large part of

enterprises considers non-investment sales

growth likely to occur. Despite in 2011 more mi-

cro, small and medium businesses anticipated

boost of sales revenues and profit as compared

to 2010, the smaller number of companies

(75% down), that had assumed growth of sales

revenues, planned to expand investment ex-

penditures enhancing production potential (as

well as modernizing investments). These results

might mean that the SME sector retained an

extra potential (companies are able to increase

production and sales without making invest-

ments). However, it is not like that – according

to estimation delivered by surveyed entrepre-

neurs, the used capacity of SME ranges at over

80%, with the dominant position of medium

enterprises. Yet, more than 44% of SME uses

100% of their capacity.

Diagram 29. SME forecasts on changes in expenditures on investments enhancing production capabilities in 2011 as compared to 2010 (% of SME by size)

Diagram 30. SME forecasts on changes in expenditures on investments modernizing fixed assets in 2011 as compared to do 2010 (% of SME by size)

Diagram 31. SME forecasts on changes in expenditures on investments enhancing production capabilities in 2011 as compared to do 2010 (% of SME by the economy sector)

Diagram 32. SME forecasts on changes in expenditures on investments modernizing fixed assets in 2011 as compared to do 2010 (% of SME by the economy sector)

However, there is a relatively

high diversification of the

use of capacity among the

industries – technological re-

sources are used in over 84%

of the companies operating

in transport and warehouse

management area as well as

in the businesses conducting

wholesale and retail activities.

The potential is of relatively

lower use in the areas of

accommodation and cater-

ing, water supply, sewage

and waste management and

restoration-related activities

and industrial enterprises.

Admittedly, the modal value

(dominant) of used resources

equals 100, yet the median for

two economy sections, includ-

ing accommodation and cater-

ing and production, is of the

lowest value amounting to 80,

i.e. 50% of the companies op-

erating in the aforesaid areas

use not less than 80% of their

production resources and the

other half – more than 80%.

Therefore, the conclusion is

that some of the businesses

from these industries have

implemented, in the recent

years, investments increasing

their potential.

SME operating in water

supply, sewage and waste

management and restoration-

related areas as well as in

accommodation and catering

industry follow a markedly

Over 44% of SME uses 100% of

their capacity.



0 20 40 60 80 100

38.1 45.0 16.9

50.9 22.8 26.4

56.8 31.8 11.4

26.9 57.3 15.6

36.9 44.0 19.1

29.4 43.5 27.1

33.7 44.0 22.2

31.2 54.4 14.4

32.8 36.4 30.8




Transport, warehouse managementand


Construction

Production





0 20 40 60 80 100

80.6

82.4

78.5

74.4

84.2

84.0

80.3

75.4

76.7




Transport, warehouse managementand


Construction

Production



Medium

Small

SME total

81.6

81.2

0 20 40 60 80 100

84.1

Micro

81.0

45.0 38.6 16.4

30.9

0 20 40 60 80 100

43.4 25.8

58.1 31.5 10.4

Medium (50-249)

Small (10-49)

Micro (2-9)



p. 33p. 32

Diagram 35. The capacity rate of used technological resources (% of used capacity; by the economy sector)

Diagram 36. SME forecasts on fluctuations of sales revenue in 2011 as compared to 2010 (% of SME by the economy sector)

Note: Diagram 36 – a copy of Diagram 10.

Diagram 33. The capacity rate of used technological resources (% of used capacity; SME by size)

Diagram 34. SME forecasts of sales revenues in 2011 as compared to 2010 (% of SME by size)

different investment policy as compared to

companies from other sectors. They feature

a relatively low usage of their capacity and a

relatively few enterprises from these segments

expect the sales revenues in 2011, whereas

at the same time the largest number of them

plans the increase of investments. SME from

the “water supply” area intend to make invest-

ments extending production capabilities as well

as modernizing ones, whilst accommodation

and catering businesses focus on modernizing

initiatives. Such tendencies in both sectors are

driven by opposite motivations. Investments

of SME operating in water supply, sewage and

waste management and restoration-related

areas are mainly based on EU subsidies (since

Poland joined the EU, SME from this sector have

been the most active applicants for EU funds –

nearly 28% of the companies have applied for

and roughly 50% of them have been granted

the money), although the Polish market is not

developing so dynamically, yet they make rea-

sonable assumptions that it happens one day

(results of the EU energy and climate policies).

On the other hand, SME from accommoda-

tion and catering industry, which apply for and

use EU grants, too, invest probably in order to

prepare themselves to EURO 2012. The question

is whether the potential raised by investments

could be used in the coming years.

In the group of SME characterizing in a high

rate of used technological resources (the high-

est one among all industries), only transport

companies plan an investment rise in 2011,

most of all intended to increase the produc-

tion capabilities. A relatively large number of

enterprises operating in this field expects the

sales growth.

Furthermore, the rate of capacity usage by SME

is considerably diversified within regions. SME

of the Podkarpackie Province feature the lowest

level of the potential use. Simultaneously, SME

operating in this region are the most active

entities in terms of investments (the largest per-

centage of businesses plans to invest in 2011).

It is accompanied by average expectations

towards the sales growth. The reason of such

incoherence lies, to some extent, in EU funds,

the SME of Podkarpackie Province efficiently

take advantage of (34% of SME have applied for

EU grants since 2004 and 2/3 of the applicants

received the funding). SME from the Łódzkie

Province, representing one

of the weakest expectations

towards the sales growth and

holding a high rate of capacity,

are also ultimately involved in

investments. In this area SME

also use EU subsidies, but the

range is far smaller as com-

pared to SME in the Podkar-

packie Province. Hence, their

investment activities have to

stem from the high rate of use

of their capacity.

Nearly 60% of SME from

the Opolskie Province plan

the sales growth, yet they

have one of the lowest rates

of the capacity use. At the

same time, a relatively small

number of them intends to

carry out investments in 2011.

Perhaps the reason of such a

low susceptibility to invest-

ment is an evaluation of the

sales growth capability, while

taking into account existing

potential.

The survey results, both in the

division by size and economy

sector as well as regions, show

that decreased willingness of

SME to invest results mainly

from the fear related to

involvement into investments

in the period of extraordinary

uncertainty and risk level, and

not from the used capacity

rate or expected rise of sales.

It also may be assumed that

quite a remarkable diversifi-

cation within the industries

Note: Diagram 34 – a copy of Diagram 4.



Zachodniopomorskie

Wielkopolskie

Warmińsko-mazurskie

Śląskie

Pomorskie

Podlaskie

Opolskie

Podkarpackie

Świętokrzyskie

Mazowieckie

Małopolskie

Łódzkie

Lubelskie

Kujawsko-pomorskie

Dolnośląskie

Lubuskie

0 20 40 60 80 100

84.3

76.6

80.9

89.0

81.6

87.9

70.5

74.2

81.6

71.8

88.1

81.1

77.5

72.3

83.0

86.2

Zachodniopomorskie

Wielkopolskie


Śląskie

Pomorskie

Podlaskie

Opolskie

Podkarpackie

Świętokrzyskie

Mazowieckie

Małopolskie

Łódzkie

Lubelskie

Kujawsko-pomorskie

Dolnośląskie

Lubuskie

0 20 40 60 80 100

38.9 38.1 23.0

23.6 41.7 34.7

31.3 46.9 21.9

42.4 32.5 25.2

32.1 38.3 29.6

34.0 52.8 13.2

40.6 29.0 30.4

59.3 27.8 13.0

35.2 25.3 39.6

56.1 31.6 12.2

29.5 44.3 26.1

42.6 39.7 17.6

46.6 30.1 23.3

45.8 30.1 24.1

46.9 19.5 33.6

30.8 40.2 29.1



Zachodniopomorskie

Wielkopolskie


Śląskie

Pomorskie

Podlaskie

Opolskie

Podkarpackie

Świętokrzyskie

Mazowieckie

Małopolskie

Łódzkie

Lubelskie

Kujawsko-pomorskie

Dolnośląskie

Lubuskie

0 10 20 30 40 50

18.518.5

36.336.8

25.019.4

29.728.1

26.521.2

30.630.6

28.320.8

42.036.2

18.518.5

24.720.9

19.720.5

37.531.8

23.522.1

11.09.6

25.331.3

26.526.5

Investments modernizingthe fixed assets

Investments increasingproduction capabilities

p. 35p. 34

Diagram 37. The capacity rate of used technological resources (% of used capacity; SME by regions)

Diagram 38. SME forecasts on fluctuations of sales revenue in 2011 as compared to 2010 (% of used capacity; SME by regions)

Diagram 39. SME forecasts on the increase of investment expenditures in 2011 as compared to 2010 (% of SME; by regions) in non-investment approach

to the development arises

out of the fact that prices in

some economy sectors are

likely to be risen. For instance,

nearly 60% of the companies

operating in information and

communications industry

forecast sales revenue growth

in 2011 and barely 16% of

them scheduled an increase

in investments. A similar, yet

a slightly weaker discrepancy

between plans of sales and

investment growth is seen

among the companies running

real estate and professional,

scientific and technical opera-

tions, as well as production

entities.

Female companies are less

prone to investments than

male businesses. Probably

it stems from their sales

expectations – the smaller

number of female companies

anticipates the increase of

revenues as compared to male

ones. However, the percent-

age of female companies, that

invested in 2010 and invest in

2011 compared to the per-

centage of companies, that

increased sales output in 2010

and expect it to grow in 2011,

is lower than among male

enterprises. Therefore a low

inclination investment among

female companies may ad-

ditionally result from the

characteristics of particular

sectors they operate in (rela-

tively more of female companies conduct busi-

ness activities in e.g. trade and real estate as

compared to male ones, whereas fewer operate

in the industry). Moreover, the reason might be

the development-oriented attitude – the group

of female companies comprises more female

entrepreneurs who reckon that investments

(both of expansion and modernization types)

have nothing to do with their businesses. It is

to be assumed that the large number of female

companies is not concentrated on develop-

ment, which requires investments comparing to

male businesses.

The reason of lower readiness for investments

among female companies, comparing to male

business units, is not differences in the rate of

used technological resources, as in both groups

it is similar and amounts to 81.7% and 80.8%

for female and male enterprises, respectively.



2011Investments modernizing

production capabilities



2011Investments increasingproduction capabilities


15.4 48.1 4.3 32.2

9.4

0 20 40 60 80 100

53.2 3.7 33.8

12.9 50.2 33.03.9

16.0 44.0 6.6 33.4



Launching of new products on the market

Purchase of new technologies

R&D investments

11.7 26.9 6.0 55.4

10.4

0 20 40 60 80 100

25.4 6.5 57.7

21.6 43.7 31.82.9



27.3 40.4 6.1 26.3

23.6

0 20 40 60 80 100

46.0 3.5 26.8

26.2 45.6 24.53.6

25.0 41.1 6.3 27.6









11.1 31.4 2.7 54.7

8.7

0 20 40 60 80 100

29.0 3.7 58.5

23.3 43.0 31.52.3



R&D investments



Medium

Small

Micro

0 20 40 60 80 100

41.2

22.3

24.0

29.9

15.5

12.2

22.2

10.5

8.0

R&D investments New productsPurchase of

new technologies

p. 37p. 36

Diagram 40. Changes in SME investment expenditures in 2010 as compared to 2009 and forecast on fluctuations in investment expenditures in 2011 as compared to 2010 (% of SME by sex – female companies)

Diagram 42. Changes of SME investment expenditures on R&D and innovations in 2010 as compared to 2009 (% of SME)

Diagram 41. Changes in SME investment expenditures in 2010 as compared to 2009 and forecast on fluctuations in investment expenditures in 2011 as compared to 2010 (% of SME by sex – male companies)

Diagram 43. SME forecasts on changes in investment expenditures on R&D and innovations in 2011 as compared to 2010 (% of SME)

Diagram 44. SME forecasts on increase of investment expenditures on R&D and innovations in 2011 as compared to 2010 (% of SME by size)

Polish companies are reluctant to invest in inno-

vations. According to the Polish Central Statisti-

cal Office (GUS)31, in 2007-2009 18.1% of indus-

trial enterprises and 14% of service companies

launched process and/ or product innovations.

Within the group of small businesses, innova-

tions were introduced by 10.9% of industrial

enterprises and 11.6% of service companies. As

for the medium enterprises these numbers cor-

responded to 30.1% and 20%, respectively. In

addition, our spendings on R&D are extremely

low and therefore we are ranked at the bottom

of the list of EU countries.

Monitoring of the SME output in 2010-2012

proves low and decreasing interest of micro,

small and medium enterprises in R&D invest-

ments. Furthermore, in 2010 and 2011 they

were rather not fond of purchasing new technol-

ogies. It would be certainly much lower unless

we were provided with EU funds, partially

addressed to investments, in the current

forecast period (2007-2013), most of all in new

technologies to be used by the SME sector.

On the other hand far more companies made

investments in 2010 and planned to invest in

3.4 / Concern for product innovations

2011 in product innovations. However, it is still

not enough comparing to, for instance, German

enterprises, which are the key business partner

of the Polish companies in the international

trade. The fact is that almost 1/3 of SME think

that launching new products on the market is

none of their business.

The situation concerning both R&D investments

and the purchase of new technologies and

product innovations depends crucially on the

company size. A relatively small number of mi-

cro and small enterprises invest in R&D. 24% of

businesses comprsied in the group of medium

enterprises plan to rise expenditures for R&D in

2011. This is really a huge interest. The same re-

fers to new technologies. as well as investments

in new products, yet the scale of interest in the

latter ones is much greater, irrespecitve of the

company size – nearly ¼ of micro businesses,

30% of small and 50% of medium enterprises

intend to launch new products on the market

in 2011. Taking into considetaration their fear

related to the economic slowdown, it is to be ac-

knowledged that these new products constitute

the base, the large part of SME

companies attempts to build

up their competitive market

position upon.

An interesting thing is

a diversification of SME plans

towards expenditures on R&D,

purchase of new technologies

and investments in product

innovations, depending on

the industry they operate in.

Information and communica-

tions sector is definitely the

most investment-oriented

one within the SME area. They

have no competitors among

SME from other sections of the

economy.

On the other hand, accommo-

dation and catering as well as

the industry are also deeply

interested in product innova-

tions. Yet, plans of industrial

enterprises regarding R&D

31Innovative activities of

enterprises in 2006-2009, Polish Central Statistical

Office (GUS) 2011.



0 10 20 30 40 50

22.114.7

9.9

20.117.1

15.0

49.928.4

29.6

36.513.7

11.6

11.113.0

2.5

22.08.9

7.5

16.59.0

5.5

14.623.9

16.3

29.611.5

10.9

R&D investments New productsPurchase of

new technologies






Construction

Production



5.2 2.929.9 62.0

6.4

0 20 40 60 80 100

4.726.1 62.7

18.0 43.2 2.2 36.6



R&D investments



14.4 2.431.9 51.3

10.1

0 20 40 60 80 100

2.630.0 57.3

26.4 40.9 2.3 30.4



R&D investments



p. 39p. 38

Diagram 45. SME forecasts on increase of investment expenditures on R&D and innovations in 2011 as compared to 2010 (% of SME by the economy section)

activities or purchase of new technologies seem

to be extremely alarming. The companies doing

their business in professional, scientific and

technical area also come off badly. However, it

is to be remembered that this sector comprises

not only companies dealing with scientific

research and R&D works, but also includes legal,

accounting, advertising firms32.

Susceptibility of female companies to R&D

investments and purchase of new technologies

is lower comparing to male companies. It can

be explained by the characteristics of particular

industries female businesses operate in, just

as in the case of investments in expansion and

modernization. According to the data, divided

by industry, commerce and real estate services,

which feature over-representation of female

companies, are the environments with a relative-

ly low percentage of SME making investments in

R&D and purchasing new technologies.

Yet, a diversified inclination to launch product

innovation cannot be interpreted by the char-

acteristics of particular industries. All industries

are able to and should introduce new and up-

graded products and services on the market.

It might be explained by the lower risk

tendency, most of the female companies

identify innovations with – 11.4% of female

enterprises making no investments in any

innovations justify it with reluctance to take

additional risk by female owners or manag-

ers (it also refers to 4.5% of male companies).

Diagram 46. Forecasts on changes in investment expenditures on R&D and innovations in 2011 as compared to 2010 (% of SME by sex – female companies)

Diagram 47. Forecasts on changes in investment expenditures on R&D and innovations in 2011 as compared to 2010 (% of SME by sex – male companies)

Monitoring of the SME output in 2010-2012

indicates that the large party of SME com-

panies does not use external funding for

operational and development purposes. Over

50% of enterprises declare that in 2010 and

2011 they were not in debt in any banks and

approx. 70% announced not to take advan-

tage of leasing within the said period.

As far as loans are concerned, it depends on

the size of the enterprise. Medium companies

are far more interested in loan financing as

compared to micro businesses. In addition,

double the percentage of the micro enter-

3.5 / Low susceptibility to external funding

Furthermore, in female companies, it is more

frequent that reason of non-investments

in innovations is the characteristics of the

industry they operate in, based on the belief

that it does not need any innovations, as com-

pared to male businesses (the belief shared

by 50.2% of female companies and 35.4% of

male companies making no investments in

innovations).

prises decrease their debts in banks compar-

ing to those that have it increased. It results

from the lower demand of the companies, in-

cluding particularly micro businesses, for the

capital as they limit investment expenditures.

The reasons might be also found in high cash

flow liquidity in the enterprise sector, that

arises out from the net profit rise in 2011.

Probably the low inclination towards loans

may stem from continuously high require-

ments the banks impose on borrowers.

The survey reveals an interesting informa-

tion on low involvement of SME into leasing

opportunities. It is believed that this form of

32 The Classification Chart,

Polish Central Statistical Office (GUS).



53.7

8.7

30.7

6.9



10.0 42.9 11.8 35.4

4.9

0 20 40 60 80 100

30.0 9.7 55.5

12.4 53.7 22.211.6

Medium

Small

Micro



0 20 40 60 80 100

2.3 29.0 5.5 63.2

7.2 17.4 3.0 72.5

12.9 40.0 6.9 40.3

6.3 49.8 6.9 37.0

8.4 42.1 14.0 35.5

5.2 28.5 10.4 56.0

5.0 30.1 11.5 53.4

8.3 46.6 16.2 28.9

5.5 34.5 10.8 49.2






Construction

Production



Growth Drop Status quo Non applicable

0 20 40 60 80 100

5.3 25.2 4.7 64.8

1.4 19.1 0.2 79.3

9.5 20.2 5.6 64.7

2.4 24.6 5.2 67.7

8.2 37.5 8.9 45.3

5.7 14.3 4.4 75.6

3.3 24.1 1.6 71.0

12.9 35.1 13.2 38.9

4.7 23.0 7.7 64.7






Construction

Production



Growth Drop Status quo Non applicable

71.1

5.6

19.9

3.4



52.8

5.5

31.8

9.9



7.1 36.1 6.4 50.3

4.8

0 20 40 60 80 100

17.9 4.6 72.7

9.2 54.9 28.57.4

Medium

Small

Micro



69.75.1

20.4

4.8



p. 41p. 40

Diagram 48. Changes of bank debts in 2010 as compared to 2009 (% of SME)

Diagram 52. SME forecasts on bank debt fluctuations in 2011 as compared to 2010 (% of SME by size)

Diagram 54. SME forecasts on bank debt fluctuations in 2011 as compared to 2010 (% of SME by the economy section)

Diagram 55. SME forecasts on fluctuations In the use of leasing in 2011 as compared to 2010 (% of SME by the economy section)

Diagram 50. Changes in the use of leasing in 2010 as compared to 2009 (% of SME)

Diagram 49. SME forecasts on debt fluctuations in 2011 as compared to 2010 (% of SME)

Diagram 53. SME forecasts on fluctuations in the use of leasing in 2011 as compared to 2010 (% of SME by size)

Diagram 51. SME forecasts on changes in the use of leasing in 2011 as compared to 2010 (% of SME)

financing is addressed most

of all to SME. It is because

leasing, contrary to the bank

loans, requires no assets to

be the collateral. It applies

particularly to micro enter-

prises. However, the survey

discloses that this group of

companies shows the lowest

interest in leasing. Small

companies are also abso-

lutely less keen on loans

comparing to medium en-

terprises. It means that SME

take advantage of external

funding for current opera-

tions and not in respect of

investments. In this case,

leasing should be a better

solution than the loan, yet it

goes the other way round.

The percentage of companies

not using loans ranges from

28.9% to 72.5%, depending

on the industry. Enterprises

from the sector of water

supply, sewage and waste

management and operations

related to restoration are the

greatest beneficiaries of the

bank loans, whilst those op-

erating in the real estate area

report the lowest demand for

them. Even in the sector of

information and communica-

tions, in which the largest

number of companies antici-

pating the debt increase in

2011, it refers to roughly 13%

of the organizations.



Leasing conditions

Loan access

Cooperation with banks

26.8 24.127.5 21.6

25.6

0 20 40 60 80 100

Convenience

26.2

Hindrance

37.2

No influence

11.0

Non applicable

21.6 24.9 6.9 46.6

34.8 25.7 25.7 13.8

25.9

0 20 40 60 80 100

28.0 24.2 21.9

32.8 32.5 6.428.3

Medium

Small

Micro

Convenience HindranceNo influence Non applicable

Medium

Small

Micro

35.0 32.1 27.7 5.1

24.3

0 20 40 60 80 100

38.0 26.1 11.6

32.4 33.8 3.530.3


32.3 26.8 7.8 33.1

21.0

0 20 40 60 80 100

25.4 7.0 46.7

35.3 37.4 19.37.9

Medium

Small

Micro


0 20 40 60 80 100

19.1 54.1 13.4 13.5

26.5 28.9 38.2 6.4

24.0 29.5 36.8 9.6

28.2 30.8 28.4 12.6

37.5 30.5 28.6 3.3

25.3 36.4 27.4 10.9

20.8 39.4 27.8 11.9

31.1 42.3 16.6 10.0

29.2 36.2 23.6 11.0






Construction

Production




0 20 40 60 80 100

21.1 37.2 15.9 25.8

20.3 38.6 29.6 11.5

10.8 32.7 31.3 25.2

36.1 15.0 26.0 22.9

41.8 18.5 29.0 10.7

25.4 28.1 25.2 21.4

24.6 33.6 26.5 15.2

28.5 41.9 18.1 11.5

32.3 21.7 20.3 25.8






Construction

Production




p. 43p. 42

Diagram 56. Influence of the loan access and the use of leasing on development opportunities and the economic situation of companies (% of SME)

Diagram 58. Loan access – influence on development opportunities and economic and financial situation of the company (% of SME by size) development opportunities and economic and financial

Diagram 57. Cooperation with banks – influence on development opportunities and economic and financial situation of the company (% of SME by size)

Diagram 59. Leasing conditions – influence on development opportunities and economic and financial situation of the company (% of SME by size)

A relatively low concern for leasing among

the companies from various sections of the

economy proves a weak interest in invest-

ments within SME. However, two sectors,

including water supply, sewage and waste

management and operations related to

restoration and transport, stand out among

others, with the relatively largest number of

companies using leasing solutions. Transport

companies are the main clients to leasing

firms – in 2010 the biggest leasing area (64%)

was the road transport and value of leasing

agreements concluded by the organiza-

tions operating in transport and warehouse

management area reached nearly 17% of

total value of new agreements signed with

leasing institutions33. It may be assumed that,

for transport companies, this is the leasing,

which is the key source of funding of invest-

ments into basic fixed assets.

Enterprises from the area of water supply,

sewage and waste management and opera-

tions related to restoration do not hold a

considerable share in total value of new

leasing agreements (0.5%)34, yet a relatively

large number of them uses this form of in-

vestment financing. The same refers to bank

loans. This is a consequence of extraordinary

Diagram 60. Cooperation with banks – influence on development opportunities and economic and financial situation of the company (% of SME by the economy section )

Diagram 61. Loan access – influence on development opportunities and economic and financial situation of the company (% of SME by the economy section)

involvement into invest-

ments as compared to the

companies operating in

other industries. In 2011, in

this group the number of en-

tities intensifying the use of

leasing increased, whereas

the number of enterprises

depleting this external

source of investment fund-

ing diminished.

The research results indi-

cate that the reason of low

susceptibility of SME to take

advantage of the external

funding was, to a relatively

low extent, loan access and

cooperation with banks as

well as terms and conditions

of leasing. It was confirmed

by entrepreneurs.

Opinions of small and

medium companies on

cooperation with banks,

loan access and terms and

conditions of the leasing are

similar, yet more favorable,

as compared to micro busi-

nesses – more than 1/3 of

them recognize them as a

convenience. In net value35

they also consider these

three variables related to

the access to external fund-

ing a convenience.

On the other hand, while

verifying SME assessments

on loan access from the

perspective of a particular

sector of the economy, it

35 Net – a difference between the percentage of companies recognizing the external funding as a convenience and the percentage of companies recognizing the external funding as a hindrance.

33 Operations of leasing

companies in 2010, Polish Central Statistical Office

(GUS), 2011.

34 Op. cit.



0 20 40 60 80 100

21.1 27.4 6.5 45.0

6.5 35.6 1.4 56.5

11.1 27.6 10.9 50.4

27.9 13.3 12.8 46.0

46.5 18.3 10.2 24.9

21.3 27.0 7.7 43.9

21.9 26.1 4.1 48.0

22.8 40.1 14.4 22.8

19.6 25.8 5.1 49.5






Construction

Production

Water supply, sewageand waste management, restoration



Use of leasing

Bank debts

2.9

0 20 40 60 80 100

33.6 9.8 53.6

2.8 16.3 1.9 78.9

Growth DropStatus quo Non applicable

Leasing conditions

Loan access


27.5 22.026.9 23.6

28.0

0 20 40 60 80 100

Convenience

21.4

Hindrance

33.9

No influence

16.7

Non applicable

17.5 25.6 9.4 47.5

Use of leasing

Bank debts

6.7

0 20 40 60 80 100

30.9 10.5 51.9

6.2 22.1 6.2 65.5

Growth DropStatus quo Non applicable

Leasing conditions

Loan access


26.7 24.828.1 20.4

24.9

0 20 40 60 80 100

Convenience

28.9

Hindrance

37.3

No influence

8.9

Non applicable

23.8 25.3 6.0 44.9

p. 45p. 44

may be concluded that banks

prefer collaboration and pro-

vide transport companies and

those operating in accommo-

dation and catering area with

more favorable conditions, yet

they grant loans to information

and communications companies

reluctantly and upon terms and

conditions that are hard to ac-

cept. Perhaps, the reason of dis-

crepancies in evaluation of loan

access conditions is the type of

collateral required by the banks

granting loans to the companies

operating in these areas36. In the

event of transport, hotel and

catering companies the lenders

demanded mainly a pledge on

fixed assets. As for information

and communications businesses

Diagram 62. Leasing conditions – influence on development opportunities and economic and financial situation of the company (% of SME by the economy section)

it was a pledge on the owner’s property and

blank bill of exchange, which probably stems

from lack of fixed assets of the value to pro-

vide a proper security. Moreover, companies

operating in all sectors judge similarly the

cooperation with banks, that goes beyond

regular loan-taking (transport companies

also give it extraordinary notes).

Assessment of leasing terms and conditions

looks alike, yet in this case the lowest grades

are given by the organizations from real es-

tate and information and communications.

In terms of loan-taking female companies

and male companies report only slight dif-

ferences. In 2011 in both groups over 50%

of companies do not take loans and a small

percentage of them increases debts in banks.

On the other hand, more male companies

benefit from leasing. It results from the fact

that in the transport industry the population

of male companies is larger than the one of

female companies and the first group recog-

nizes leasing of means of transport as a key

source of increase in assets.

Female and male companies are not forced

to limit their external funding due to the loan

access. In net value, more female and male

companies consider them a facilitation. Fe-

male entrepreneurs give higher marks than

male businessmen. Both groups of compa-

nies do not perceive the cooperation with

banks in a definitely negative light either. Yet,

in net value, only female companies assess

it positively. It may result from different ap-

proach of women and men to collaboration

in general, as women are more open to it.

More companies express their opinions on

terms and conditions of leasing than actu-

ally benefit from it. It emphasizes an interest

Diagram 63. SME forecasts on fluctuation in bank debts and the use of leasing in 2011 as compared to 2010 (% of SME by sex – female companies)

Diagram 65. Loan access and leasing conditions – influence on development opportunities and economic and financial situation of the company (% of SME by sex – female companies )

Diagram 64. SME forecasts on fluctuations in bank debts and the use of leasing in 2011 as compared to 2010 (% of SME by sex – male companies)

Diagram 66. Loan access and leasing conditions – influence on development opportunities and economic and financial situation of the company (% of SME by sex – male companies )

in this form of investment financing and the

fact it had been used beforehand (prior to

2010 and 2011). In net value, evaluation of

terms and conditions of leasing is positive for

both groups of enterprises. However, highly

positive recommendations come from male

companies. It may stem from experiences of

aforementioned transport companies. The

market of “transport” leasing in Poland is the

most developed one, which probably affects

the background, the counterparts, i.e. the

lessor and lessee have acquired and there-

fore it fructifies in a positive assessment of

the cooperation.

36 „Monitoring of SME output in 2010-2012”.



p. 46

The view of micro, small and medium enter-

prises reflecting the analysis of their opera-

tions in 2010 and plans for 2011 (partially

implemented, as the survey was carried out

between June 15 and August 19, 2011), shows

the organizations willing and able to take ad-

vantage of the market situation, that enhanced

following the economic slowdown of 2009

3.6 / SME in 2011 – summary

(GDP growth in 2010 reached 3.9%37; accord-

ing to the forecasts GDP in 2011 will amount to

4.2%38 against 1.6% back in 200939). Simulta-

neously, these companies do take a substantial

risk, featuring a realtively low susceptibility to

invest and insignificant inclination to benefit

from external funding.

MICRO, SMALL AND MEDIUM ENTERPRISES IN 2011

⁄ In 2011 financial results of SME were better than in 2010 - more companies anticipate the

increase of sales, profit and market share.

⁄ Not all SME increasing sales results manage to achieve a parallel rise in profit. This is

a consequence of a considerable inflation of costs stemmed from growing prices of fuels,

resources and materials.

⁄ Micro enterprises are more capable of turning sales growth into rise in profit as compared

to small and medium companies.

⁄ Increase in the market share (nearly by 1/4) results partially from seizing it from weaker

players and, partially, this is a consequence of the market growth.

⁄ Small and medium companies are more capable of taking advantage of the growing market

than micro businesses.

⁄ SME are far more aware of the significance of changes occurring in the macroeconomic

environment as compared to the previous years and they learned to incorporate them into

their business plans.

⁄ SME are definitely more prone to rise salaries than to increase employment.

⁄ SME have increased their awareness of importance of human resources as a component

contributing to the company’s ability to compete on the market.

⁄ SME characterize in a relatively low susceptibility to invest- the smaller the company, the

lower the susceptibility.

⁄ SME, with a low susceptibility to invest, characterize in a relatively higher inclination to

modernization investments as compared to investment enlarging their productivity.

⁄ SME feature an extremely high (over 80%) level of used capacity.

⁄ In SME there is no interdependence between the level of used capacity, anticipated sales

growth and the inclination to investments.

⁄ Low SME susceptibility to investments originates from the fear for macroeconomic

situation and not from the level of used capacity and anticipated sales increase.

⁄ SME are relatively not much interested in R&D investments and the purchase of new

technologies, except for the companies operating in the information and communications

sector.

⁄ SME are relatively highly concerned about product innovations – the larger the company,

the higher the interest.

⁄ Susceptibility to investments in product innovations is greatly diversified by the sector –

it is the highest among the companies operating in information and communications,

accommodation and catering and industry areas and the least – in the transport area.

⁄ SME feature low susceptibility to use external financing – the smaller the company, the

lower the susceptibility.

⁄ Loans are most of all dedicated to support current operations. Low susceptibility to

investments hampers the loan demand.

⁄ SME are relatively satisfied with the loan access and cooperation with banks, in general.

⁄ Each industry perceives differently the loan access, which results probably from the type of

collaterals that are required in the loan application procedures.

⁄ SME use the leasing to a relatively low extent. It is a consequence of a limited susceptibility

to investments in the times of great anxiety and the market risk.

⁄ According to SME terms and conditions of leasing are fine.

⁄ Female companies are less development-oriented as compared to male businesses.

Therefore, less female companies report growth of sales, profits and market share. They are

less prone to investments, including R&D investments, purchase of new technologies and

investments in product innovations. As they prefer (similarly to male companies) the rise of

salaries and not the staff increase, they are very cautious about extension of employment.

On the other hand they are more eager to rise salaries as compared to male enterprises.

Similarly to male companies, they are reluctant to take on external funding, despite their

assessment of loan access is slightly more favorable. They are not afraid of cooperation

with banks. However, they use leasing to a limited extent, although they give positive marks

to leasing access procedures.

Scheme 1. Characteristics of SME basing on operations in 2010 and plans for 2011

Source: own works.

s.47



37 Gross domestic product

in Q3 2011 – preliminary estimation, Polish Central

Statistick Office (GUS) 2011.38 Forecast of

M. Starczewska-Krzysztoszek.

39 Gross domestic product. op. cit.

p. 48 s.49

Characteristics of micro, small and medium en-

terprises examined in terms of their behavior in

2011 – expectations towards sales, profit, mar-

ket share, employment and remuneration plans,

investment plans, investment profiles, concern

for investments innovations and R&D as well

as susceptibility to external funding – enable

to propose a SME typology. It can be clearly

seen that some businesses are „wary” – they do

not invest, expect smaller revenues, profit and

market share and thus plan to decrease. On the

other side of the barricade, there are compa-

3.7 / Fluctuation trends in SME operations – typology of businesses

nies of high expansion potential, that anticipate

rise of revenues, profit and market share, make

investments, focusing on modernization and

product innovations and, the most important

issue, finance R&D activities. Furthermore, they

intend to increase the labor. The middle of the

scene is occupied by two groups – one is closer

to wary companies whilst the second one as-

pires to join the developing entities.

Threatened SME seem to be enterprises holding

no development perspectives. It is hard to judge

TYPE OF SME

CHARACTERISTICS (BASING ON THE PLANS FOR 2011)

Threatened ⁄ they expect drop of sales revenues, decrease of profits and market share

⁄ they do not make investments

⁄ they do not launch new products on the market

⁄ in general, they neither take advantage of bank loans nor leasing

⁄ they expect decrease in staff hiring in their businesses

On the

crossroads

⁄ they expect drop of sales revenues, decrease of profits and market share

⁄ they have invested in fixed assets (enhancing and modernizing investments),

yet they plan a decrease of such investments in 2011

⁄ they do not plan to launch any new products on the market

⁄ they used bank loans, but they assume that their debts will go down

⁄ they expect decrease in staff hiring in their businesses

Stable

innovator

⁄ they expect rise of sales revenues, increase of profits and market share

⁄ they anticipate a slight increase of investments in fixed assets

⁄ they plan a slight increase of their new product offer

⁄ the number of employees will remain unchanged

Dynamic

innovator

⁄ they expect rise of sales revenues, increase of profits and market share

⁄ they invest in R&D, new technologies, licenses and expect a slight increase of

such investments

⁄ investments in fixed assets will go up insignificantly

⁄ they plan to launch some new products on the market (growth)

⁄ the staff will slightly increase

Scheme 2. Typology of SME basing on the plans for 2011 – description

Scheme 3. Types of SME versus strategic goals (% of SME)

+oth

er g

oal

s= 1

00

%+o

ther

go

als=

10

0%

+oth

er g

oal

s= 1

00

%+o

ther

go

als=

10

0%

what their reason for “withdrawal” is, yet this

is a fact and it will result in widening of the gap

between them and other companies. In 2011

the number of business complying with the said

profile is relatively high (nearly 28%). Nonete-

less, in 2010 there had been 18% more of them

(over 33%). Therefore, the decrease in the

number of SME featuring the threatened type in

2011, as compared to 2010, indicates that these

companies have not lost the entire battle and

their situation measured in a particular year

does not detremine explicitly their future. It has

been confirmed in the analysis of the strategic

goals carried out by the organizations qualified

as threatened – in fact, most of them focus on

maintaining their position on the market, yet

some companies list sales growth among their

strategic targets.

On the crossroads SME had been investing in

expansion and modernization of their fixed

assets back in 2010, however they had been

expecting the sales drop and not planned

investments for 2011 as well as anticipated staff

reduction. Nevertheless, they are capable of

lowering the debt (payoff). It refers to nearly

23% of them. The situation of this type of SME

is not transparent. The fact that they find it hard

to overcome these problems can be proved

in the percentage of “on the crossroads” SME

present in 2010 and 2011. Yet, this type of SME

focus more heavily on their development goals

as compared to threatened ones – actually 1/3

identifies its strategic target as upholding, but

almost ¼ concentrates their operations on the

sales growth. This group encompasses nearly

12% of companies with the strategic goal meant

as the increase in the market share, which can

be achieved by tough players with a firm market

position.

A relatively large number of enterprises belong-

ing to both types include companies that are

supposed to provide the owner and his/her

family with a job and salary. For them, a decline

of sales and profit is not a problem as long as

their operational goal is being implemented.

TYPE OF SME

Upholding on the market

Rise in the market share Sales growth

Profit increase

Providing the owner with job and salary

Threatened 49.7 4.9 16.4 12.7 13.7

On the

crossroads33.5 11.9 22.4 14.2 13.9

Stable

innovator40.5 13.4 17.8 16.3 9.2

Dynamic

innovator28.9 15.9 27.5 16.8 6.9

Source: J. Kalka (CBOS), M. Starczewska-Krzysz-toszek, basing upon the

analysis of the survey named “SME in Poland,

strengths and weaknesses, opportunities and threats”

within the project “Monitor-ing of the SME output in

2010-2012” co-financed with EU subsidies the European

Social Fund, PKPP Lewiatan.

Source: J. Kalka (CBOS), M. Starczewska-Krzysz-toszek, basing upon the analysis of the survey named “SME in Poland, strengths and weaknesses, opportunities and threats” within the project “Monitor-ing of the SME output in 2010-2012” co-financed with EU subsidies the European Social Fund, PKPP Lewiatan.



p. 51p. 50

Stable innovators consist of growing and

developing companies. Their expansion is

based on investments, mainly of modernizing

character, as well as investments in product

innovations. They are on their way to become

the organizations featuring a broad range of ap-

plied innovations. In 2011, they made over 30%

of SME and their number had gone up by more

than 5% comparing to 2010. It proves the de-

velopment potential of Polish SME. An interest-

ing thing is that this group comprises relatively

many entities with the strategic goal defined as

upholding on the market. Probably they recog-

nize the risk they take in the process of invest-

ing and launching product innovations as some

sort of a threat. As they develop, they need to

continue with monitoring of their situation in

order not to let development-oriented actions

they undertake destabilize them. Therefore,

their target is to maintain on the market, basing

on the growth stemming from investments and

innovations, and not surviving as it is meant by

threatened and on the crossroads companies.

Dynamic innovators have the least popula-

tion among SME, however their number grew

by 25% against 2010. They make R&D invest-

ments, purchase new technologies and licenses,

invest into product innovations. Their market

position is firm – they plan growth of sales,

profit and market share as well as the staff in-

crease. Theoretically, their strategic goal ought

to be the rise in company’s market value, yet it

applies solely to 3.5% of dynamic innovators.

In this group as well as in others, the majority,

reaching nearly 29% of companies, focuses on

upholding on the market. Perhaps, as in the

case of stabile innovators, dynamic innovators

consider the investment risk a threat. However,

it does not hamper their development tenden-

cies. A relatively small number of dynamic inno-

vators has strategic goals meant as the increase

in market share. These companies build up

their competitive advantage owing to invest-

ments, including, in particular, investments in

R&D, new technologies and product innova-

tions. In the end of the day, it should result in

TYP OF SME SME 2010 SME 2011 MICRO SMALL MEDIUM

Threatened 33.2 27.9 30.4 11.4 2.9

On the

crossroads22.7 22.8 21.7 30.4 20.2

Stable

innovator28.9 30.4 31.5 24.2 16.0

Dynamic

innovator15.2 18.9 16.3 34.0 61.2

the rise of market share, even if the market do

not grow itself.

In addition, the group of dynamic innovators

comprises the enterprises, whose strategic goal

is to provide the owner and his/her family with

job and salary. In fact, it is not that large, but it

means that the goal defined this way does not

limit the expansion potential of SME.

The clue of the presented typology is to analyze

suggested SME types in terms of the size of

companies.

The largest number of threatened entities

is among micro businesses. The bigger the

company, the less of the said type is comprised

within that group. It proves that some Polish

micro enterprises are still very weak, do not

believe in themselves and will rather limit their

business operations than look for opportuni-

ties, expecting an economic downturn. This

hardly ever happens among medium enter-

prises.

The companies from the on the crossroads

group consist, most of all, of small enterprises.

Other groups (micro and medium businesses)

contain 1/3 less of this kind of entities. It means

that a significant portion of small companies

tries to be active, invest, take advantage of the

external funding, yet probably their market po-

sition is still too weak and, perhaps, managing

persons face up problems related to efficient

operations, at the higher risk and anxiety.

The group of stable innovators is an interesting

example. The majority in this group consists of

micro enterprises, resembling the structure of

the threatened entities. It highlights the devel-

opment potential of micro businesses, no fear

related to investments and launching of prod-

uct innovations onto the market. They solely

report concern for the staff increase. Moreo-

ver, the interesting thing is that the larger the

companies, the less of stable innovators among

them. It may be assumed that the period, small

and medium enterprises used to have features

attributed to stable innovators, has terminated.

The vast part of them moved to a group of dy-

namic innovators.

The group of dynamic innovators consists

mainly of medium companies. Over 60% of

them is classified as this type of business. In

addition, this area is widely represented by

small companies. It appears that even small

enterprises are capable of developing basing on

R&D, new technologies and they are not afraid

of new recruitments. It may be assumed that

small organizations, which passed through the

crossroads stage, got stronger and are an excel-

lent “substance” to become innovators.

Furthermore, the survey shows that medium

companies have become a genuine „middle

class” of the Polish entrepreneurship, as they

are so strong that they can open up a new

chapter of their operations – change the way

they build up their competitive market position,

basing it more firmly on innovations and R&D.

The analysis of suggested SME types regard-

ing economy sectors also leads to interesting

conclusions.

Companies from the area of water supply, sew-

age and waste management and operations re-

lated to restoration as well as trade businesses

are the most inefficient ones.

Enterprises operating in the water supply

industry are at the stage of instable develop-

ment – they invested, benefited from external

funding, yet still fail to activate the market so

to be able to increase their revenues and profit.

This is a hard time for the expansion.

SME from the trade sector experience much

more troubles – the large part of them (1/3)

have features of threatened companies and

nearly ¼ - on the crossroads businesses. This

group contains some stable innovators, which

Scheme 4. Types of SME by size (% of SME)










p. 53p. 52

have no problems with the rise of revenues

and profit, and they invest in product innova-

tions. However, it is to be assumed that trade

SME comprise numerous companies, that may

encounter difficulties in surviving.

Information and communications is the top

sector with more than 70% of enterprises

encompassing innovators (stable and dynamic).

Trade companies also manage well – over 60%

of them belong to both group of innovators.

SME operating in information and communica-

tions and industrial areas show the greatest

expansion potential. They can not only han-

dle regular operations, increasing revenues,

profit and market share, but also are the most

involved in investments covering innovations

and R&D activities. Moreover, this area features

an employment growth. If we were to ponder,

which companies to be supported with EU

funds, these would definitely be SME operating

in the aforesaid sectors. They may turn out to

be a crucial stabilizer of the economic growth

in Poland in the period of a slightly depleted

economic development in 2012.

The majority of female companies are threat-

ened entities with a relatively small number

Scheme 5. Typology of SME basing on the plans for 2011 – description

TYPE OF SME THREATENED ON THE

CROSSROADS

STABLE

INNOVATOR

DYNAMIC

INNOVATOR

SME PL 2011 27.9 22.8 30.4 18.9

C – Production 16.7 21.3 32.4 29.5

E – Water supply, sewage and waste management, restoration

12.6 49.4 18.6 19.4

F – Construction 30.7 22.8 29.3 17.2

G – Wholesale and retail activities 33.1 23.7 28.5 14.7

H – Transport and warehouse management 16.2 31.1 29.1 23.6

I – Accommodation and catering 22.1 30.8 27.0 20.0

J – Information and communications 21.2 6.5 31.0 41.3

L – Real estate services 27.9 11.7 49.3 11.1

M –Professional, scientific and technical operations

32.4 16.5 35.6 15.5

of dynamic innovators. Here, there are more

on the crossroads businesses comparing to

male companies. Stable innovators are domi-

nant entities among male companies, however

threatened enterprises are quite strongly repre-

sented, too.

Hence, female SME encounter more troubles

as compared to male ones – over 62% of them

report drop in sales, profit and market share,

they make no investments and employment

is or is supposed to be limited. In addition,

these companies do not plan to launch new or

enhanced products and services on the market.

On the other hand, such a difficult situation is

experienced “only” by 50% of male companies.

It stems from the fact that perhaps some of

the female companies operate in the sectors

with no development potential. However, these

sectors are also occupied by male companies.

It seems that this situation might be more thor-

oughly explained by an expansion approach of

female companies – the strategic goal for over

42% of them is to uphold on the market whilst

barely 7.6% recognize it as the increase in the

market share. In terms of male companies it

looks a bit different – 36.7% of companies are

focused on maintaining on the market whereas

12.5% – expect to have the market share grown.

Yet, 38% of female companies are innovators

– stable and dynamic. It means that part of fe-

male companies handles the development very

skillfully, makes investments in innovations as

well as R&D (1/8). The group of male companies

comprises more enterprises with such an at-

titude (50%). However, the important issue is a

trend for changes, which, in the case of female

companies, is considered advantageous. If the

same criteria were applied to selection of SME

types back in 2010, then the group of female

enterprises would comprise more threatened

and on the crossroads entities (68.7%) and less

innovators. On the other hand, in 2011 male

companies reported more on the crossroads

organizations as compared to 2010 and less

moderate innovators.

Scheme 6. Types of SME by sex (% of SME)

TYPE OF SME SME 2010 SME 2011Female companies

Male companies

Threatened 33.2 27.9 37.1 27.7

On the

crossroads22.7 22.8 25.0 22.1

Stable

innovator40.5 30.4 25.8 29.9

Dynamic

innovator15.2 18.9 12.2 20.3










12.8 37.9

19.7

29.5

Dynamicinnovator

On thecrossroadsThreatened

Stable innovator

p. 55

4STRENGTHS AND WEAKNESSES OF SME Strategic goals of SME – establishing of entrepreneurial „middle class” / 4.1

Strategic goals of SME versus market potential / 4.2

Price or quality – revolution in development of the SME competitive advantage model / 4.3

Innovations in SME – sector’s dichotomy / 4.4

SME capacity – is the size of the Polish market a barrier? / 4.5

Low vulnerability of SME to take advantage of the EU Common Market / 4.6

Strengths and weaknesses of SME – summary / 4.7

Enterprises are able to implement numerous

goals, yet they ought to define one strategic

goal that will enable them to select out business

priorities. Business activities of the organiza-

tion with the strategic goal meant as increase of

the market value would vary from the ones of

the company focusing on the rise in profit. The

difference results from the time perspective. The

profit increase is to be achieved in a short-term

perspective whilst the growth of market value –

a long-term perspective. It means that companies

determining their goal as the rise in market value

will, e.g. involve more eagerly in investments that

would be building up their competitive position

and market value long-term. However, at the

same time, these investments may lead to profit

decline short-term, since new fixed assets spur

cost inflations (depreciation). Furthermore, the

essential element might be a difference between

operation of businesses with the strategic goal

identified as the sales growth and those, which

primarily aim at increasing in the market share.

Accomplishment of these goals require oppo-

site strategies. Sales increase means focusing

4.1 / Strategic goals of SME – establishing of entrepreneurial „middle class”

on production and parallel ability to evaluate

the market potential, customer needs and their

fluctuations. Expansion of the market share is

an additional skill related to management of

knowledge on competitors, that allow for taking

advantage of errors they make. This is also an

ability to develop basing on the external growth

model, i.e. seizing opportunities allowing for

mergers and takeovers.

On the other hand, upholding on the market

might be the goal reflected differently in the im-

plemented business model. It has been shown in

the analysis of various types of SME as compared

to strategic goals they pursue (Scheme 3). It

proves that focusing on maintaining on the mar-

ket may result in company’s weakening as well

as its development using investments in innova-

tions, R&D and new technologies.

The companies that defined its strategic goal as

upholding on the market are present in all types

of SME and thus they implement totally different

strategies and their standing also varies from. Of

course, the largest number of them derives from

threatened category, yet great many of such enti-

ties stable innovators.

Monitoring of SME output in 2010-2012 allowed

to identify targets entrepreneurs consider strate-

gic. Taking into account the entire SME popula-

tion and comparing it to large companies40, we

can see a clear distinction – SME focus mostly on

maintaining on the market. Out of large compa-

nies, quite a considerable percentage of enter-

prises (over 19%), recognize upholding on the

market as a key factor for their business opera-

tions. However, a relatively large part of organi-

zations 250+ centers on increase in the market

share and rise in the market value (37.5%) whilst

this element is important to only 13.5% of SME.

Diagram 67. Upholding on the market versus types of SME

40 „Monitoring of the output of large enterprises in 2010”, PKPP Lewiatan i Deloitte.


4. Strengths and weaknesses of SME

11.02.5 0.7

39.4

20.4

14.7

11.3

Rise in the market share Other

Growth of thecompany'market

value

Maintaining on the market Profit increaseSales increase

Providing the ownerand his/her family

with the salary

9.1 1.1

20.3

22.4

17.4

0.1

29.6

Rise in themarket share Other


value

Maintaining onthe market Profit increaseSales increase


with the salary

9.92.2 0.7

40.4

19.9

14.7

12.2



value



with the salary

12.44.3

19.3

17.3

21.6

25.1



value


12.44.3

19.3

21.6

17.3

25.1



value


17.7

4.1 0.5

34.1

24.4

12.8

6.4



value

Maintaining on the market Profit increaseSales increase


with the salary

p. 57p. 56

SME are also companies, for which the strategic

goal is to provide the owner and its family with

job and salary. In terms of large enterprises the

goal defined as above does not exist at all.

Nonetheless, analysis of the strategic goals

implemented by SME, without division into

micro, small and medium enterprises, distorts

significantly the image. The survey showed that

differences between sub-sectors of SME are con-

siderable and due to the large number of micro

businesses within the SME area, the latter affect

the final perception of SME viewed through the

prism of strategic goals.

The research indicates that the SME sector is

gradually less homogenous. Micro enterprises

focus on upholding on the market, sales increase,

rise in profit – this group comprises 75% of

micro companies. Moreover, this section con-

tains the largest number of organizations with

the strategic goal meant as providing the owner

and its family with job and salary. Hence, micro

companies concentrate on short-term activities

and not search for development opportunities in

a scheduled manner.

Small enterprises, though closer to micro com-

panies than to medium business, vary from

them essentially from the expansion potential

perspective. In this group, nearly twice as many

enterprises aim at increasing of the market share

and market value (in total they constitute 21.8%

of the population covering small enterprises)

as compared to micro businesses. On the other

hand, there are less organizations with an objec-

tive meant as upholding on the market (15%

down) and providing the owner and its family

with job and salary (1/2 down). The picture of

small companies described by their strategic

goals prove that the increase in the size of the

company measured by the employment level is

tightly interrelated with the change in the busi-

ness philosophy. Small enterprises are definitely

more focused on the expansion than micro busi-

nesses.

Medium companies perceived in the light of their

strategic goals appear to be a totally different

world. Actually they are a copy of large entities.

The only difference is the fact that more medium

enterprises center on the increase in the mar-

ket share (18% down) and less of them focus on

the increase in the market value (1/4 down) as

compared to large companies. Therefore medium

businesses vary dramatically from micro and

small companies. Their business model remain

open to development, including external expan-

sion through mergers and takeovers. They feel

strong and are determined to take advantage of

the strength. They make a genuine “middle class”

Diagram 68. Strategic goal (% of SME)

Diagram 72. Strategic goal (% of MEDIUM enterprises)

Diagram 70. Strategic goal (% of MICRO enterprises)Diagram 69. Strategic goal (% of LARGE enterprises)

Diagram 73 (69). Strategic goal (% of LARGE enterprises)

Diagram 71. Strategic goal (% of SMALL enterprises)

Source: (Diagram.69): own works basing upon

„Monitoring of the output of large enterprises in 2010”,

PKPP Lewiatan and Deloitte.

Source: (Diagram.71): own works basing upon „Monitoring of the output of large enterprises in 2010”, PKPP Lewiatan and Deloitte.

of the Polish entrepreneurship, stabilizing the

economy, taking up opportunities that appear

on the market. It also has been disclosed in the

analysis carried out in Chapter 3, presenting the

potential of SME seen from the angle of sales,

profit, investments, including investments into

innovations. It demonstrates clearly that medium

enterprises are a development chance for the

Polish economy.



11.27.6

0.1

42.2

24.1

14.7



value



with the salary

12.53.7 0.5

36.7

19.7

15.0



value


10.9

32.3

30.7

26.0

Huge, marketis constantly

growing

Market is shrinkingand this is a permanent,

irreversible trend

The industry has reached its full capacity level,

market is stable,demand does not grow

Hard to say

8.9

37.6

42.2

11.3


growing


irreversible trend



Hard to say

6.8

38.9

46.7

7.6


growing


irreversible trend



Hard to say

10.633.1

32.2

24.1


growing


irreversible trend


market is stable,demand does not grow Hard to say

p. 59p. 58

Female companies are at the start of their busi-

ness road – they have to focus on surviving.

Those which have acquired stability attempt to

increase sales.

Male companies behave alike, however there

are fewer businesses focusing on surviving. On

the other hand more enterprises strive for the

increase of the market share, what indicates that

1/8 of male SME implement the expansion strat-

egy, whereas barely 1/13 of female companies

recognize higher market share as a potential.

An interesting element is a comparable share

of companies with the strategic goal meant as

providing the owner and its family with job and

salary both in the population of female and male

companies. The literature remarks that

a relatively high percentage of female companies

just considers it the strategic goal. However, it

absolutely does not refer to Polish female SME

companies. Therefore it is to be expected that

women, who are owners of enterprises as well as

female managing persons will chase experienced

male companies and establish businesses, that

will be capable not only of surviving, yet also of

developing.

Diagram 74. Strategic goal (% of SME by sex – female companies)

Diagram 75. Strategic goal (% of SME by sex – male companies)

Diagram 76. Opportunities of the industry growth (% of SME)

Diagram 77. Opportunities of the industry growth (% of MICRO enterprises)

Diagram 78. Opportunities of the industry growth (% of SMALL enterprises)

Diagram 79. Opportunities of the industry growth (% of MEDIUM enterprises)

The image of SME and strategic goals they imple-

ment viewed through the prism of the market

potential (industry) they operate in is an interest-

ing subject.

Micro, small and medium enterprises assess that

the markets they conduct their business activi-

ties on provide them with various opportutnies.

Nearly 1/3 of SME confirm that they operate on

growing markets and another 1/3 of SME reckon

4.2 / Strategic goals of SME versus market potential

that their industry have reached the growth ca-

pacity, the market is stable, yet still there are lots

of things to do there. Over ¼ of SME believe that

they operate on the market which is shrinking

and they recognize it as a permanent tendency

and not a short-term change resulting from the

economic slowdown. Quite many SME (more than

10%) is not able to evaluate the develpment po-

tential of the market they work on. It might cover

enterprises whose oeprations are focused on a

small, local niche and are not fond of expansion

opportunities.

The development potential of markets SME oper-

ate on might vary for micro, small and medium

enterprises. Strategic goals pursued by these

companies lead to an assumption that medium

businesses act, to a greater extent, on the devel-

oping market whilst micro businesses run their

activities on shrinking markets.

The evolution of the market potential carried out

by entrepreneurs operating there indicates that

one of the expansion opportunities for micro,

small and medium enterprises is the industry,

market they conduct their business activities on.

The particular industry should also define strate-

gies the company may and ought to take advan-

tage of.

Markets featuring high development potential

should be filled up with companies that imple-

ment strategies (strategic goals) based on the



9.8

32.7

32.1

25.4


growing


irreversible trend



Hard to say

11.7

33.2

33.3

21.8


growing


irreversible trend



Hard to say

Other

Rise of the market value

Rise of the market share

Provision of work and salary

Profit increase

Sales increase

Maintaining on the market

Hard to sayShrinking

marketStable market Market is

constantly growing

3.4

20.3

7.6

15.7

20.3

32.2

100%

80%

60%

40%

20%

0%

3.1

9.7

10.7

20.0

25.2

30.7

1.9

11.6

9.1

15.5

59.4

6.3

24.5

8.2

17.0

42.8

p. 61p. 60

sales growth, increase in the market share or

rise in the market value. The largest number of

companies that match this characteristics are

recruited among medium enterprises. It has been

proved in the survey, pointing out that almost

50% of medium companies operate exactly on

such markets.

Stable markets, where demand does not rise or

rises very slowly, should be dominated by the

businesses, which focus on the profit increase,

but they are also capable of expanding their

market share, using advantages over competitors.

Certainly this area is also filled by the compa-

nies whose objective is to uphold on the market.

The largest number of companies matching this

characteristics is in the group of small enterprises

(nearly 2/3 of small entities have indicated three

goals altogether). The evaluation of the market

potential made by SME proved that the largest

number of small companies is located on grown-

up markets (over 42%).

Shrinking markets featuring a constant decline

are mainly the operational area of micro busi-

nesses. The business model of companies running

their business activities on shrinking markets is

determined by niche strategies taking into ac-

count product and geographical location.

In such industries the goal is supposed to be up-

holding on the market and rising the profit. These

markets are dominated by micro businesses (26%

of micro enterprises, only 11% of small companies

and nearly 8% of medium enterprises indentify

the market they operate on as shrinking). Of

course, it does not mean that micro companies do

not operate on other markets. If they did, it would

mean no chances to develop and it is not like

this as micro businesses articulate clearly these

opportunities. More than 30% of them perform

business activities on developing markets and the

remaining 30% on grown-up markets.

The division into female and male companies

operating in developing and grown-up markets

is similar within both groups. However, out of the

group of female SME, 16% more of the companies

are present on shrinking markets as compared to

male companies.

Diagram 80. Opportunities of the industry growth (% of SME by sex – female companies)

Diagram 81. Opportunities of the industry growth (% of SME by sex – male companies)

Diagram 82. Strategic goals implemented by SME on various markets of diversified development potential (% of SME)

Hence, it should not differentiate female and male

companies from the persepctive of development

potential of a a particular industry.

The confrontation of strategic goals implemented

by SME against the profile of the market they op-

erate on enable to point out the relation between

these variables.

The dominant group on all types of markets

comprises the companies focusing on upholding

on the market. It is not surprising as always some

part of enterprises, due to various reasons, face

up problems with liquidity. Yet numerous organi-

zations with the strategic goal meant as maintain-

ing on the market on all types of markets indicate

that irrespective of the market character, these

markets are competitive, since only such markets

generate the pursuit to sustain the position.

Furthermore, all type of these markets are oc-

cupied by the companies whose strategic goal is

to provide owners and their families with job and

salaries. It means that such a motivation may be

successful on all these markets. However, since

more of them operate on shrinking markets as

compared to other ones and the majority is com-

prised in the group of businesses that were not

able to determine the market profile, it may be as-

sumed that the companies with the goal defined

this way, are in most of cases not interested in

development.

Growing markets are dominated with companies

with the strategic goal (apart from upholding on

the market) meant as sales increase and rise in

the market share. Not many, yet proportionally

the majority, of the enterprises strive for growth

of the market value. The goals defined this way

respond to opportunities of the growing market.

With a finely selected strategy and implementa-

tion tools, they are capable of taking advantage of

the market potential.

Grown-up, stable markets are filled up with

companies that pursue sales and profit growth. It

seems that the businesses operating on such mar-

kets should benefit from the ability to increase

the market share to a greater extent. Since it does

not happen like that (barely 10% of SME define

the strategic goal this way), it means that SME do



0 20 40 60 80 100

51.8 27.4 14.2 6.5

50.7 30.4 12.1 6.9

51.9 19.3 20.4 8.3

34.7 33.9 26.1 5.3

36.6 32.3 25.9 5.1

28.5 30.3 29.9 11.3

38.1 31.6 17.8 12.5

37.9 40.2 18.1 3.7

22.1 42.5 20.7 14.7

Huge, market is constantly growing

Market is shrinking and this is a permanent,

irreversible trend



Hard to say






Construction

Production



p. 63p. 62

not hold the potential for acquisitions, mergers

and takeovers. They are rather becoming a target

for larger entities themselves.

On declining markets, that shrink gradually, the

core objective for 60% of SME is to uphold on the

market. Some companies try to increase sales,

however, a relatively few of them strive for the

profit increase. And this goal seems to be strategi-

cally the most favorable one for the businesses

operating on shrinking markets.

An immensely interesting issue is the situation

in the group of companies that were not able to

specify profile of the market they operate on.

There are nearly ¼ of enterprises whose strategic

goal is to provide owners and their families with

job and salaries. Comparing this objective with

lack of knowledge on the market profile leads to

a conclusion that these businesses operate in the

niche, focusing on the local market and products

they manufacture and, probably, the customers

with whom they maintain more “family” than

typically business relationships. On the other

hand, the featureless market the entrepreneurs

are not able to define, comprises quite a decent

(6.3%) group of companies with the goal defined

as the increase in the market share.

The survey indicated that majority of SME prop-

erly match strategic goals to be implemented with

the market profile.

Moreover, it is worth to examine types of markets

SME operate on, viewed from the perspective of

the economy sectors.

The research allows to point out sectors of the

economy the entrepreneurs operating within

recognize as a huge development potential. How-

ever, it is to be taken into account that 9 sections

of the economy subject to the survey feature an

internal diversification and therefore evaluations

of the expansion potential vary from substantially.

For instance, it seems that quite a homogenous

industry of information and communications

virtually covers publishing activities, operations

related to movie production, radio and TV broad-

casting, telecommunications, data processing,

website management, web portals41.

Undoubtedly, evaluations of entrepreneurs

operating in the publishing industry will differ

from those of businesspeople from the telecom

or data processing areas. A particularly explicit

diversification can be seen in industrial process-

ing comprising

24 industries, ranging from the printing industry

to production of food, pharmaceuticals, furniture,

metals, hardware, motor vehicles, which addition-

ally feature an internal diversity. Assessment of

entrepreneurs from industrial processing, related

to the development potential of markets they

conduct their business activities on, may be there-

fore totally opposite. Even opinion of business-

people from the sector of professional, scientific

and technical operations, which is closely associ-

ated with the developing market may not be ho-

mogenous, as, except for the companies dealing

with scientific research, it consist of advertising

agencies, enterprises handling market research,

law firms and veterinary establishments.

Taking into consideration complexity of particular

sections of the economy subject to the analysis

(maybe excluding real estate services, which are

quite homogenous), three markets (sections) are

evidently the growing ones – information and

communications, professional, scientific and tech-

nical operations and real estate services. Over

50% of SME operating in these sectors recognized

them as areas of huge expansion potential. Of

course, due to internal diversification evaluations

are not similar. For example, more than 20% of

SME carrying out business operations in informa-

tion and communications area found this market

shrinking.

Assessment of the wholesale and retail market

looks interesting as the companies operating

there consider it (1) growing, (2) grown-up, (3) de-

clining, ca. 30% stands for each of the three cate-

gories. A diversification of evaluations result from

numerous factors, yet it is worth highlighting the

two – type of traded goods and the sales channel.

Probably estimations given to the potential of the

market handling e.g. pharmaceutical goods differ

from those of the textile industry.

Traditional sales of household appliances has

other meaning for defining of the market devel-

opment potential than trading this equipment

through the Internet. However, in net value42 all

sectors (except for wholesale and retailing activi-

ties) have been assessed as the ones of growth

potential and at least more SME perceive them as

developing than shrinking.

Diagram 83. Opportunities of the industry growth (% of SME by the economy section)

Competitive standing of enterprises depend

on numerous factors the companies can affect,

but also on many variables, that are exogenous

to them. Throughout many years of studies on

SME43, it appeared that the principal element

micro, small and medium enterprises build

their competitive standing on is the price. In

fact, the meaning of quality of goods and serv-

4.3 / Price or quality – revolution in development of the SME competitive advantage model

ices soared up in 2004-2008, yet the strategy of

SME was continuously based primarily on such

unitary costs so to be able to compete with the

price. The meaning of other factors, including,

to give an example, the quality of customer

service, that has been ranked 3rd in SME priori-

ties, was important to a relatively small number

of businesses.

41 Classification scheme, Polish Central Statistical

Office (GUS).

42 Net – a difference between the percentage of compa-nies that defined the market they operate on as develop-ing and the percentage of companies that defined that market as shrinking.43 „Monitoring of the SME output”, PKPP Lewiatan carried out in 2001-2008.



70

60

50

40

30

20

10

0

Price of products/services

2004

51.957.6

64.3

57.352.0

20.9 18.7 15.221.7

26.8

9.5 9.65.9 5.6 5.5

2005 2006 2007 2008

Quality of products/servicesQuality of customer service/ fixed relations with customers

Launching new, more innovativeproducts on the market

Competent, well-motivated staff

Capability to tailor the offerto the customer needs

Price

Quality of products and services

Narrow specialization,expert knowledge and skills

Quality of the customer service

The most essential factor

0 60504010

43.4

15.4

15.3

9.8

8.3

2.4 15.4

2.4 7.7

20.5

35.3

65.7

58.1

60.8

3020 70

The most essential factors altogether

p. 65p. 64

Currently, the surveys allow to track changes that

have been taking place since 2008. Their results

show that SME have radically changed their busi-

ness philosophy and market competition in the

recent 2-3 years. It may be stated that Polish SME

have experienced a “civilization’s leap” through-

out this period. The quality of goods and services

has become definitely the most crucial element

of the competitive battle, and the quality of cus-

tomer service has been substantially enhanced.

However, the companies withdrew from building

their positions basing upon the price. Maturing

to that change has lasted quite some time and

was revealed in the period of economic down-

turn back in 2009 and in the transition period of

2010-2011.

Low economy does not foster such changes as

customers seek for low-cost goods and services

within this period. Nevertheless, it happened.

Therefore its cause lies in processes that had

begun earlier in 2007-2008, when the meaning

of the quality in building up of the competitive

standing started to increase. Probably in this

period customers, stirred up by rising income

(since the date Poland joined the EU until end

2008 the average monthly salary grew nominally

by 1/3, and really by over 17%44), stable situation

on the labor market, boosted their demand and

became far more concerned about the quality. It

accelerated the transformation of business mod-

els in SME companies – a shift from a production

model, focused on achieving of high efficiency

in the production process so to manufacture

more, quicker, and, most of all, cheaper towards

a product model, which concentrates on the

quality of products and their constant improve-

ment. On the other hand, some SME altered the

business approach into a more advanced mar-

keting model, in which the company tailors its

offer to the customers’ demand, tries to develop

their needs and provide an appropriate service

quality.

Naturally, the influence companies exerted on

the market included not a single element, but the

whole bunch of them. The price will always be

crucial. However, entrepreneurs, when asked for

three top priority factors determining the com-

pany’s competitive advantage, rank the price 3rd,

after quality of goods and services and customer

Diagram 84. Factors determining competitiveness of SME in 2004-2008 (% of total SME)

Diagram 85. Factors contributing to a current competitive standing of SME (% of SME)

service quality. Hence, the change is highly ex-

plicit and permanent.

The fact that SME have noticed the significance

of the human resource as an element, that might

be the base to build up a competitive stand-

ing of the company, seems to be an ultimately

crucial change. Merely 2.4% of SME point out

competent and well-motivated employees as the

key factor, yet if they are supposed to select two

other factors considered crucial in terms of the

competitive standing – the percentage of SME

goes up beyond 15%. In the surveys carried out

in the recent years entrepreneurs recognized this

element as a minor one.

Moreover, we have to underline the greater

importance of innovativeness – launching new,

more innovative products on the market. 2.4%

of SME consider product innovations the key suc-

cess factor, whilst 7.7% of the businesses indicate

product innovations as one of the three most

important elements.

The situation is quite interesting when we take

a look at elements contributing to the com-

petitive standing of micro, small and medium

enterprises on a separate basis. In fact, the qual-

ity is of top priority, regardless of the company

size. On the other hand, all businesses treat the

price as the factor of far lower priority in terms

of building up of the competitive standing, as

compared to quality. However, for small compa-

nies it is of a relatively greater significance as for

medium enterprises and of far higher impor-

tance than to micro businesses.

In the event of medium enterprises, the price

as the element that builds up the competitive

standing is ranked 5th. For them the key item,

except for the product quality, is capability of

tailoring products to customers’ needs, customer

service quality and specialized knowledge and

skills. It reaffirms business maturity of medium

enterprises, their closer similarity to large com-

panies than to micro and small businesses, as it

has been pointed out before.

On the other hand micro companies are more

concerned about human resources as compared

to other enterprises. It seems to be interesting

as it is not reflected in the average salary level,

which reports the lowest value in the micro

businesses. However, since it has been notified

by 2.6% of companies, probably it refers to the

44 An average salary in the

state economy in 1950-2010, Polish Central Statisti-

cal Office (GUS) and Consumer Price Index,

(GUS).



Source: own works basing upon "Mnitoring of the SME

output" in 2004, 2005, 2006, 2007, PKPP Lewiatan.

0 504010 3020

3.63.12.3

1.60.92.6

10.27.88.3

11.910.29.8

11.69.6

15.9

9.117.715.3

49.046.443.0

Micro

Medium

Small

Launching new, more innovative products on the market


Capability to tailor the offer to the customer needs

Price




0 20 40 60 80 100

46.0 12.3 15.7 4.9 12.6

33.7 11.4 37.8 11.0 3.9

48.9 8.0 5.7 11.9 14.5

44.0 18.5 21.4 3.1

35.1 21.6 17.8 13.2 4.7

34.9 15.2 19.1 10.2 9.3

57.0 17.8 6.5 12.0 4.6

42.7 22.0 15.4 4.1 10.6

57.3 14.0 6.6 10.4 9.3




Price products and services

Capability to tailor the offer to the customer needs

Launching new, more innovative products on the market







Construction

Production



Diagram 87. Factors contributing to a current competitive standing the factor considered the top priority (% of SME by the economy section)

p. 67p. 66

businesses that operate in industries with the de-

mand for highly qualified specialists, where the

remunerations are surely more favorable than

the average for the entire micro group. Yet, it is

to be emphasized that micro enterprises have

less significant bargaining power on the labor

market not only due to lower salaries, but most

of all because of limited capabilities regarding

career paths they may offer to its staff and that

is why they might consider human resources

ultimately important.

The analysis by the industry also proves such

diversification among SME. The quality of goods

and services is a key success factor in building up

of the competitive standing for SME coming from

all sections of the economy, excluding real estate

services, where the quality of the customer

service is considered the most significant, which

seems to be reasonable. However, importance of

the quality of goods and services in building up

Diagram 86. Factors building up current position of SME on the market – top priority factor (% of SME by size)

of the competitive standing varies considerably

depending on the economy sector. It is substan-

tial to manufacturing and construction busi-

nesses. Trade, transport and just the real estate

companies find it the least important (yet, still of

the high importance).

The group of transport companies comprises

quite a high percentage (21.6%) of enterprises

that compete with the price. Probably in this case

the price competition is a crucial element they

may use to affect the market, which is highly

competitive – nearly 132 000 entities operate

in the transport and warehouse management

area45. For trade SME the factor, ranked 2nd, con-

tributing to building up of the competitive stand-

ing, outrunning the quality of goods, is quality

of the customer service, which is justified, too.

Slightly more than 15% of companies consider

the price the most important, what is surprising,

70

60

50

40

30

20

10

0

51.957.6

64.357.3

52.0

15.4

20.9 18.715.2

21.726.8

43.4

9.5 9.65.9 5.6 5.5

15.3

2005 2006 2007 2008 20112004

Price of products/services Quality of products/servicesQuality of customer service/ fixed relations with customers

10

8

6

4

2

0Narrow specialization, expert knowledge and skills

5.86.2

4.2 4.3

5.2

8.3

5.64.7

5.5

2.9

3.8

9.8

1.81.0 0.6 0.9

0.2

2.4

Capability to tailor production/services to customer needs

Fresh, innovative character products/services*/

2005 2006 2007 2008 20112004

Diagram 88. Factors determining SME competitiveness in 2004-2008 and 2011 (% of SME total) /1/

Diagram 89. Factors determining SME competitiveness in 2004-2008 and 2011 (% of SME) /2/

*/ The survey of 2011 – Launching new, more innovative products on the market.



45 Operation of non-finan-cial enterprises in 2009, Polish Central Statistical Office (GUS), 2011.

Currently

-5 5 15 25 35 45

2.4 2.3

2.4 2.0

8.3 7.2

9.8 11.8

15.3 11.7

15.4 16.4

43.4 42.8

In 2-3 years to come




Price




Currently

-5 5 15 25 35 45

4.8 1.7

0.2 0.5

6.0 5.6

10.0 13.1

23.7 15.6

19.0 18.6

32.2 37.9

In 2-3 years to come




Price




-5 5 15 25 35 45 55 65

2.3 9.4

2.0 16.8

7.2 18.3

11.8 37.0

11.7 55.9

16.4 60.2

42.8 66.5

Top priority factor3 top priority factors altogether




Price




-5 5 15 25 35 45

1.6 2.6

2.4 2.4

9.4 7.4

9.3 10.7

12.2 10.3

14.3 15.1

48.7 46.3

Currently In 2-3 years to come




Price




Diagram 90. Factors that will build up a competitive position of the company within 2-3 years to come – top priority factor (% of SME)

Diagram 92. Factors that will build up a competitive position of the company within 2-3 years to come – top priority factor (% of SME by sex – female companies)

Diagram 91. Factors that will build up a competitive position of the company within 2-3 years to come – top priority factor and 3 top priority factors altogether (% of SME)

Diagram 93. Factors that will build up a competitive position of the company within 2-3 years to come – top priority factor(% of SME by sex – male companies)

p. 69p. 68

as it is not easy for smaller trade companies to

compete with the price against big commercial

networks, including discount stores.

Coming back to transformation that has ap-

peared in the SME sector in the recent years,

the comparison of research results of 2011 with

results from the previous years clearly shows

that Polish SME have made a “civilization’s leap”

in the most significant business areas, that deter-

mine their competitive skills:

the quality of products deliv-

ered to the market, quality of

the customer service, capabili-

ty to provide customer-tailored

solutions (matching products

and services to the customers’

needs), specializations and

even innovativeness. And all

of these at the expense of the

price. It has remained a sub-

stantial component contribut-

ing to the building up of the

SME competitive standing, yet

it has definitely and eventually

lost its dominating position.

Analysis of the survey re-

sults referring to the factors

contributing to strengthening

of the competitive standing is

the most vivid example of the

transformation that has hap-

pened in the SME sector in a

relatively short period of time.

The question is whether in

the years to come the change

in the situation on the Polish

market and markets of the EU

Member States Polish com-

panies tightly cooperate with,

will influence this new attitude

of SME towards factors, which are currently the

reference points for their market competition.

Despite the slower pace of the economy, they

see no reason to change the perception of fac-

tors being their reference points in the market

competition.

Entrepreneurs reckon it is unreasonable to

modify the approach towards building up of

the competitive advantage on the market in 2-3

years to come, that will actually be harder than

in 2011. Still, the majority of them will base on

the quality of goods and services. A bit more of

SME declare to focus on the price and less – on

the quality of the customer service. An advan-

tage is an increased interest in product innova-

tions (three top priority factors collectively – rise

from 7.7% to 9.4% of SME). It is supposed that the

company’s image will expand,

too (0.4% of SME indicated it

as the most important element

in 2011, and 1.7% – for 2-3 years

to come; three top priority

factors collectively – rise from

10% to 11.4% of SME). Percep-

tion of the SME future from the

perspective of how they build

up and intend to build up their

competitive standing indicates

that changes occurring evi-

dently in 2011 are considered

permanent ones. The increase

in the percentage of SME, that

are willing to build up their

competitive standing basing on

human resources and prod-

uct innovations as well as the

corporate image in 2-3 years to

come, prove that the “revolu-

tion” the companies have gone

through since 2007-2008 is ir-

revocable and this is a marked

tendency for changes, which

has been permanently incor-

porated to business models

of micro, small and medium

enterprises.

Therefore, it is to be assumed

that SME constitute, to a great-

er extent, a stable base of the

Polish entrepreneurship. Most of businesspeople

and managing persons have broader know-how,

necessary to develop the company, including the

knowledge related to identification of risks, abil-

ity to recognize opportunities even in the period

of the economic downturn. Simultaneously, they

learned how to optimize and not minimize costs,

and gradually appreciate the human resources,

but still they are unwilling to take on the risk of



p. 71p. 70

Scheme 7. Comparison of products and services manufactured by Polish SME to their EU counterparts (% of SME)

Comparison of Products With their EU counterparts

SME PL

Price Quality

Promotion and distribution Innovativeness

More attractive (% of SME)

65.9 26.9 17.4 14.0

Similar (% of SME)

17.7 58.3 42.8 63.3

Less attractive

3.8 4.1 21.2 9.6

Hard to say (% of SME)

12.7 11.8 18.5 13.2

greater usage of the financial leverage, as they

prefer to base on own funds, what limits not

only in-company risks but also economic risks in

general.

In terms of expansion of the competitive stand-

ing, female and male companies base and intend

to base in 2-3 years to come on three factors –

the quality of products and services, price and

quality of the customer service (male businesses

also base on the ability to match the output to

the customers’ needs). However, the importance

of these elements in both groups remains differ-

ent. For male companies, the quality of products

and services is, and definitely will be in 2-3 years

to come, a key to success. For female companies

it is also essential, yet the quality of the customer

service is also of a relatively higher significance.

Declarations concerning factors male and female

SME are supposed to build up their competitive

standing on indicate that these companies have

slightly redefined their business models. Female

companies intend to pay greater attention to

the quality of goods and services and matching

products to the customers’ need, at the expense

of the customer service quality, whilst male

companies are also planning to tailor products to

customers’ demands, but also to launch product

innovations on the market, reducing customer

service quality as well as specialization.

It is crucial to notice an insignificant rise in the

number of female companies and male compa-

nies, for which the price is the key to success.

Micro, small and medium enterprises are aware

of their internal transformation, since as they

compare products and services to the ones

traded on corresponding EU markets (regardless

of the fact whether they export there or not),

they seem to be deeply self-assured.

Of course, this is only a self-esteem that can-

not be verified unequivocally, however, a high

appraisal of what somebody is doing is also

extremely important, as it may stimulate actions,

that Polish SME badly need in the area of innova-

tions, as well as result in crossing the border of

the Polish market and recognizing potential of

the EU Common Market. And, lots of work is to

be done there.

Monitoring of the SME output in 2010-2012 shows

that merely 10.4% and 8.7% of SME increased

R&D investments in 2010 and 2011, respectively.

The purchase of new technologies reported

slightly better results as the 11.7% and 11.1% of

the companies increased their investments in

this area in 2010 and 2011, respectively (Chapter

3.5, Diagrams 32, 33). Micro, small and medium

enterprises were more involved into product in-

novations.

The similar conclusion can be drawn from the

data of the Polish Central Statistical Office (GUS)

quoted in the Charter 3.4.

As SME considered the quality the key factor

contributing to building up of the competitive

standing should gradually enhance this situation,

most of all in the field of process and product

innovations. On the other hand, as the priority of

the customer service quality went up, SME ought

to pay attention to the necessity to introduce

marketing innovations. SME should also focus on

the quality of products and services as in many

cases communications with the market have to be

changed in order to let it recognize the new offer.

4.4 / Innovations in SME – sector's dichotomy

Direct questions related to investments in in-

novations addressed to SME in the survey prove

a low susceptibility of micro, small and medium

enterprises to innovations.

In 2008-2010 52.6% of SME introduced at least

one innovation. One type of innovation was

incorporated by 14.7% of companies, two types –

14.2%, three types – 11.3% and four types – 12.4%.

It means that nearly 38% of enterprises added

more than one type of innovations to their opera-

tions. This is a significant trend as investments

into innovations should encompass all opera-

tional areas. The decision on launching of the new

product on the market should be bolstered with

marketing innovations in order to mark its pres-

ence on the market and stimulate profitability.

In many cases preparation to the manufacturing

process should be preceded by implementation of

process innovations, e.g. the purchase of ma-

chineries and devices or new technologies, that

allow to produce the new product. Furthermore, it

requires organizational changes, which will adjust

the organizational structure to new processes.

46 The survey assumed, in compliance with definitions presented to Respondents, that innovation

(according to Oslo Manual, 2005) means introduction of the practice recognized as new or significantly more

efficient solution referring to the process, products (goods or services), marketing or organization.

4 types of innovations have been singled out:

a) process innovations

i.e. introducing the in-company

practice meant as new or significantly

more efficient methods of production

or key deliveries, including new and

enhanced technological processes,

machineries, devices and tools,

software and methods of establishing

and providing of service, applied in

the company.

c) marketing innovations

i.e. incorporating new marketing

method in the enterprise operation,

that has not been applied before and

that results from a new marketing

strategy, essentially varying from the

current one. This type of innovations

comprise crucial, from your com-

pany’s perspective, changes in the

product’s appearance, its packaging,

positioning, promotion, price policy.

b) product innovations

i.e. launching a new and product

or service, considered crucial from

the company’s perspective, or a sig-

nificant improvement of the product

or service having been previously

offered by the company, considered

crucial from the company’s perspec-

tive.

d) organizational innovations

i.e. incorporating new organizational

method in the enterprise operation,

new organization of workplaces or

external relations, e.g. new methods

referring to cooperation with

suppliers, share of responsibilities

and decision-taking in respect of the

staff, introduction of new functioning

procedures.



40

26.9

39.3

28.132.2

30

20

10

0

Process innovations

Products innovations

Organizational innovations

Marketing innovations

0

10

20

30

40

50

60

26.9 25.2

36.4

49.9

SME PL MICRO SMALL MEDIUM

0

10

20

30

40

50

60

28.1 26.4

38.6

54.4


0

10

20

30

40

50

60

39.3 38.246.4

52.4


0

10

20

30

40

50

60

32.2 31.435.8

45.3


Diagram 95. SME implementing PROCESS INNOVATIONS in 2008-2010 (% of SME by size)

Diagram 97. SME implementing ORGANIZATIONAL INNOVATIONS in 2008-2010 (% of SME by size)

Diagram 96. SME implementing PRODUCT INNOVATIONS in 2008-2010 (% of SME by size)

Diagram 98. SME implementing MARKETING INNOVATIONS in 2008-2010 (% of SME by size)

p. 73p. 72

Diagram 94. Percentage of companies, which implemented innovative practices in 2008-2010 (% of SME)

If nearly ¼ of SME and 45% of SME, which imple-

mented innovations in 2008-2010 (3 or 4 types of

innovations), are aware of this interdependence, it

means that their innovativeness is not accidental,

but a scheduled process providing success op-

portunities.

Assessment of the inclination to innovativeness

made for the 3-year period instill optimism, yet as

if we reduce the time range of the survey to

1 year, we would see that the innovative standing

of the Polish sector of micro, small and medium

enterprises is not that good. Of course, it has to be

underlined that the examined period was

a time of economic downturn when the busi-

nesses depleted their interests in investments,

including investments in innovations. It has been

approved in the data of the Polish Central Statisti-

cal Office (GUS)47.

When evaluating SME susceptibility to innova-

tions, it has to be viewed through the prism of the

company size and industries, as they report huge

differences.

Micro businesses are definitely less fond of invest-

ing in innovations, even in such that need no large

capital expenditures. When they decide to go for

investments in innovations, in most cases these

are product or marketing ones. This breakdown is

reasonable as launching new or enhanced prod-

ucts on the market generally requires changes in

the market communications, transformation of

the market segmentation. Therefore, marketing

innovations are indispensable. It manifests some

sort of a maturity of micro enterprises in taking up

active investments. Small companies also focus

on product innovations. However, this sector

lacks connections with marketing innovations,

as in the case of micro companies. A relatively

large number of small enterprises introduces

organizational changes. The survey does not allow

for identification of the character of organiza-

tional innovations. Yet, the interest the compa-

nies expressed towards this type of innovations

indicates that small enterprises take their time to

conduct in-company transformation, which might

be an added value right now, when we enter the

second wave of the crisis starting back in 2008.

Medium organizations acted similarly in 2008-

2010. However, their involvement in innovations,

including all types, was far greater as compared to

micro businesses and greater, comparing to small

companies.

It is clearly seen that troubles with susceptibility

to investments in innovations are experienced

mostly by micro enterprises. In addition, small

companies have much to do in this area, despite

the large part of them have been introducing

some innovations.

The analysis of SME approach to innovations,

examined by the industry, brings interesting

conclusions.

Companies operating in the sector of information

and communications and industry are the leaders

of innovation implementation. The majority of

SME conducting their business activities in infor-

mation and communications area implemented

innovations in 2008-2010. The image of this

economy sector seen from all the analyzed angles

proves that it is the most mature one in terms

of business, although the market it operates on

continues to grow (despite not all SME determine

the growth potential of this market this way, yet

the reasons have been explained earlier in this

report).

Europe has forgotten about the industry (maybe

apart from Germany), whose contribution to GDP

is gradually dropping. In Poland the industry is a

sector that generates the largest part of the added

value, amounting to approx. ¼48 (whilst informa-

tion and communications – ca. 4%). Hence, it

is extremely important that SME present in the

industry feature an extraordinary susceptibility to

innovations, as compared to the Polish average.

Probably it refers to all industries, however it

shows the power of this sector and its expansion

potential. The significance of the industry in the

47 Innovative operations of enterprises in 2004-2006,

Polish Central Statistical Office (GUS) 2008;

Innovative operations of enterprises in 2006-2008,

Polish Central Statistical Of-fice (GUS) 2009; Innovative operations of enterprises in

2007-2009, Polish Central Statistical Office (GUS) 2011.

48 Gross National Product in Q3 2011 – initial estimation, Polish Central Statistical Office (GUS) 2011.



40

21.7

37.5

24.8

34.2

30

20

10

0

Process innovations




40

29.7

38.8

28.931.9

30

20

10

0

Process innovations




Diagram 99. Percentage of companies, which implemented innovative practices in 2008-2010 (% of SME by sex – female companies)

Diagram 100. Percentage of companies, which implemented innovative practices in 2008-2010 (% of SME by sex – male companies)

p. 75p. 74

Polish economy is still considerable, in spite of

unfavorable external trends. Yet, these trends

stimulate pro-innovative changes in numerous ar-

eas of the industry. For instance, the information

access has shortened (and will shorten) essen-

tially the product life cycle. The industry has to be

able to adjust to this process and be more flexible.

Therefore, most of all these industries, which will

be capable of matching flexibly the variable needs

of the market, will develop, and this capabil-

ity has to be based on innovations. A growing

demand for resources resulting from the global

economic growth, including power resources, at

constant reserves, will cause the price inflation

and thus increase costs of industrial companies

(enterprises operating in the service area do not

INNOVATIONS

Implemented innovations in 2008–2010 Process Product Organizational Marketing

SME total26.9 39.3 28.1 33.7

C – Production 28.9 49.3 32.0 33.7

E – Water supply, sewage and waste management, restoration

13.7 19.7 26.6 25.8

F – Construction23.8 38.3 27.7 28.5

G – Wholesale and retail activities16.3 40.2 31.6 31.3

H – Transport and warehousemanagement

13.3 19.8 30.7 32.8

I – Accommodation and catering 19.3 39.6 33.3 34.8

J – Information and communications 59.0 71.9 51.5 58.7

L – Real estate services12.1 23.7 35.4 47.7

M – Professional, scientific and technical operations

20.5 38.6 27.0 34.8

Scheme 8. SME, which implemented process, products, organizational and marketing innovations in 2008-2010 (% of SME by economy section)

encounter such difficulties). It exerts pressure to

search for new, innovative solutions, that would

limit the use of resources and simultaneously

reduce the demand and prices. Climate changes

stressed the necessity of sustainable develop-

ment, rose requirements towards industrial enter-

prises, whose operations affect climate changes

(companies operating in the service area do not

encounter such difficulties either, or, if it occurs,

their range is insignificant). It also stirs up search

for new, innovative solutions. This strong external

pressure forces the organizations operating in the

industrial sector to implement changes as well

as stimulates, particularly the smallest ones, to

perform innovative activities. However, industrial

companies should focus heavily on process inno-

vations (new or considerably enhanced produc-

tion methods, new and enhanced technological

processes, machineries, devices and tools, etc.).

On the other hand, within the surveyed period,

SME operating in the industry, were the least

interested in this innovativeness area. However,

they were deeply involved in implementing of

product innovations.

Sectors of the economy covering services con-

centrate mainly on organizational and marketing

innovations as well as product innovations. Proc-

ess innovations, by definition, are not considered

their core business.

The lowest position in the innovativeness ranking

is taken by water supply, sewage and waste man-

agement and operations related to restoration.

This sector should characterize in high level of

innovativeness, yet is does not and, at least, it did

not back in 2008-2010. Simultaneously this area

featured a relatively large involvement in invest-

ments (2010) and still does (2011), as compared

to companies from other sectors. Unfortunately,

most of them do not comprise innovations.

In 2008-2010 more male companies (53.7%) intro-

duced innovative practices as compared to female

companies (49.2%). Male companies dominated in

three types of innovations and nearly 40% more

male SME companies implemented process inno-

vations than female companies. Yet, slightly larger

number of female companies launched marketing

innovations comparing to male companies.

This is partially a consequence of a diversification

within the industry in both groups of companies.

However, in terms of innovations, over 50% of

female companies and a bit more than 1/3 of male

companies, which did not invest in innovations

reckon that they operate in the field that needs

no innovations. Furthermore, more female SME

companies (11.4%) than male companies (4.5%)

admit that lack of implementation of innova-

tions means reluctance of owners and managing



40.8

30.6 30.1

39.0

25.1

7.1

33.836.6

34.8

12.2

17.3

12.4

6.49.6

16.3

40

30

20

10

0

Micro

Small

Medium

We operate in the industry that needs no innovations

Our company is too small

We have no capital for innovations

Customers do not expect innovations

Innovations are too risky

Diagram 102. Reasons of non-interest in innovations (% of SME, which have not launched any innovations, by size)

39.237.0

33.6

12.4

6.7

40

30

20

10

0






p. 77p. 76

persons to take up supplementary risk. Therefore,

lower inclination to innovativeness among female

companies results from higher misunderstanding

of innovation and lower vulnerability to risk as

compared to male companies.

Differences among the companies in terms of

susceptibility to innovations indicate that SME,

which did not invest in innovations in 2008-2010,

should also be examined. Results of the research

negate theses claiming that the basic reason of

disapproval for investments in innovations is no

demand for innovative products, no capital or too

high risk. Enterprises that do not make invest-

ments in innovations highlighted three key factors

and just the third one is the access to capital.

However, far less SME consider the demand for in-

novative products and risk related to introduction

of innovations the reasons for non-investment

in innovations. The question is whether such

attitude arises out from lack of knowledge on

innovations, why they are introduced and what

the potential effects they bring are. The most

common reason of non-interest in innovations is

the profile of a particular industry the company

operates in. Nearly 40% of entrepreneurs not

investing in innovations claim that the industry

they run their business activities in does not need

it. The second reason indicated by 37% of SME is

the company size. Entrepreneurs state that they

are too small to invest in innovations. Such an ap-

proach means that it is rather lack of knowledge

than no inclination towards innovations. Nonethe-

less, lack of knowledge refers, to greater extent,

to micro businesses than small and medium

enterprises. However, for the latter understanding

of innovativeness needs support.

Perhaps companies that do not make invest-

ments in innovations and justify it with the

industry profile or the company size, identify

innovations with investing in new technologies,

where “new” stands for a global novelty. On the

other hand, every industry requires innovations.

While introducing innovations, the company size

is never recognized as a barrier – we can deal

with a one-man business activity, which also

reports demand for innovations. The industry

profile may only determine what the type of

innovation will be a dominant one, yet it will

not decide whether innovations are needed or

not. The size of the company may influence the

scale of innovations and, in the event of micro

businesses, in majority of cases they will be

Diagram 101. Reasons of non-interest in innovations (% of SME, which have not launched any innovations (more than one pick acceptable)

implemented on the scale of the company, not

nationwide, and hardly ever, globally.

For medium enterprises that did not invest in in-

novations, the most important reason of such an

approach is no access to capital. Yet, almost 1/3 of

them think they operate in the industry that needs

no innovations. On the other hand, few companies

indicate limitations resulting from their size. There

are more businesses that fear of the risk and com-

plain about too low demand for innovations.

Small companies act likewise and merely a per-

centage of these, which are afraid of risk is lower

than in the event of medium enterprises.

The analysis of reasons referring to lack of invest-

ments in innovations in 2008-2010 proves that

the sector of micro businesses is the one, where

loads of educational work is to be performed.

Misunderstanding of what innovations are about

is probably the reason that their fear related to

the risk to be taken up while investing in innova-

tions is insignificant. To fear the risk, at first you

need to be aware of the fact that the industry the

company operates in needs innovations and that

the company size is not a barrier for innovations.

The greatest awareness of the fact that in each

industry or company, irrespective of the size,

innovations are needed, is reported amongst

enterprises conducting their business activities in

the sectors of information and communications

and the industry. The lowest awareness, which is

quite a big surprise, is recognized in professional,

scientific and technical operations – 63.6% of

SME operating in this sector, that did not make

any investments in 2008-2010, declare that their

industry needs no innovations. However, it is to be

remembered that this sector consists not only of

research companies.

Too low demand as the reason of non-investment

in innovation is indicated most of all by the

companies from water supply, sewage and waste

management and restoration areas as well as

those carrying out professional, scientific and

technical operations. Both sectors in Poland are in

the process of market creation and therefore the

justification is credible.

Conclusions on the analysis of the research results

show that, to a considerable extent, the reason

the companies make no investments in innova-

tions is lack of knowledge on innovativeness, its



Professional scientific, and technical operations


Information and communi-cations



ConstructionProduction Water supply sewage and waste management, restoration

Accommo-dation and catering

40

30

20

10

15.0

44.0

35.1

38.2

7.7 6.4

19.3

36.6

23.7

35.6

44.8

29.8

17.0

10.5

47.3

35.0

39.9

10.8

6.4

44.2

35.8

28.6

13.7

2.6

22.1

40.7

44.6

12.411.6

34.332.8

12.410.5

55.9

33.1

12.7

9.4

5.2

63.6

29.1

10.4

23.6

2.5

70

60

50

0






Diagram 103. Reasons of non-interest in innovations(% of SME, which have not launched any innovations, by the economy section)

15.5

21.0

63.5

Yes Hard to sayNo

16.0

21.8

62.2

Yes Hard to sayNo

11.0

15.5

73.5

Yes Hard to sayNo

11.8

13.1

75.2

Yes Hard to sayNo

Diagram 108. Regardless of whether the company invests in innovations, will innovative actions be favorable to it (2011, % of SME by sex – female companies)

Diagram 109. Regardless of whether the company invests in innovations, will innovative actions be favorable to it (2011, % of SME by sex – male companies)

17.1

25.2

57.8

Yes Hard to sayNo

14.4

18.8

66.8

Yes Hard to sayNo

p. 79p. 78

types, scale and not fear of the risk or a limited

demand for innovative products or services.

Entrepreneurs frequently do not realize that

organizational changes leading to improvement

of operational efficiency of the business, which

are actually introduced by each company from

time to time, are, in fact, innovations. It also refers

to launching of the new product on the market,

which is already sold there by another company

– it is an innovation, too, yet on the scale of the

company. They are convinced that introduction of

a totally new item or a new process solution, or

a product could stand for an innovation. Hence,

businesses are very often innovative within the

meaning of the definition of innovativeness

contained in Oslo Manual, elaborated by OECD,

but they do not recognize modifications they have

launched as innovations.

When we ask whether entrepreneurs reckon that

innovative actions would be favorable to them

(no matter if they have invested in innovations

so far or not) – the affirmative answer is given

by a slightly larger number of companies than

the group of those that have invested in at least

Diagram 104. Regardless of whether the company invests in innovations, will innovative actions be favorable to it (2011; % of SME)

Diagram 107. Regardless of whether the company invests in innovations, will innovative actions be favorable to it (2011, MEDIUM businesses, %)

Diagram 106. Regardless of whether the company invests in innovations, will innovative actions be favorable to it (2011, SMALL businesses, %)

Diagram 105. Regardless of whether the company invests in innovations, will innovative actions be favorable to it (2011, MICRO businesses, %)

one type of innovations in 2008-2010. This group

covers 52.6% of SME whilst the one considering

innovative operations favorable comprises 63.5%

of companies.

However, it is significant that companies, which

have carried out investments in innovations ap-

prove that they were “favorable”. Regardless of

the size. The declaration that innovations were

favorable to the company’s development is

a guarantee that such investments will be made

in future. And in the case of enterprises that

have not been investing in innovations by far, it

might be the first step to a real introduction to

their practice. Such a relatively high susceptibil-

ity to ponder about innovations amongst small,

medium and large entities, including micro busi-

nesses is the key to success in the entire sector of

enterprises.

More female than male companies express lack

of understanding referring to innovations and

their significance in the enterprise operations,

discussed earlier in this report, and it justifies the

answer to the question on the attitude towards in-

novative actions. Not only less female companies

consider innovations favorable to the enterprise,

yet more female companies (over 1/3 up) are not

able to respond to the question, whether innova-

tions are favorable or not, as compared to male






37.8

4.8

57.4

Yes Hard to sayNo

51.7

9.0

39.3

Yes Hard to sayNo

61.3

4.9 33.8

Yes Hard to sayNo

40

50

20.7

40.2

31.4 33.1

30

20

10

0

-10

Innovations in 2008-2010

IInnovations in 2011-2012

29.6 39.3 28.1 32.2

Process innovations




p. 81p. 80

companies.

A comparison of SME inclinations to consider

innovations favorable, manifested in the survey

of 2011 with the susceptibility the enterprises

showed in the preceding years, indicates an

ultimately substantial improvement of the SME

attitude towards innovative actions.

In 2006 over 50% of enterprises confirmed

that innovative actions were favorable. In the

subsequent years the interest in innovativeness

reported a drastic decline. It may be assumed that

the reason was an outstanding economy, high

consumption dynamics, inlcuding most of all in-

ternal consumption, but also an external demand,

which did not force businesses to search for new

solutions and provide new offers to the market.

SME surveys indicate that the economic downturn

is an opportunity for growth of interest in innova-

tion investments amongst smaller companies. Is

it reflected in investment decisions? SME plans

for 2011-2012 do not prove it. Actually they do not

contain an essential modification to the approach

to innovations, yet despite the coming economic

crisis, the larger number of companies declare

investments in innovations.

In 2011-2012 55.6% of companies intend to make

investments in innovations, nearly 6% more than

in 2008-2010. The structure of innovations will

resemble the one reported in the three recent

years. The number of entities inclined to imple-

ment process innovations will drop by almost 1/3.

On the other hand SME would like to take this

time to launch organizational changes, slightly

increasing an interest in products and marketing

innovations. These are the plans concerning all

SME, regardless of the size. All SME report a de-

cline in investments in process innovations. And

all of them anticipate to grow the number of other

investments.

Diagram 113. Does your company intend to launch any innovations in 2011-2012? (data compared with SME that introduced innovations in 2008-2010; % of SME)

It proves that SME, which got involved in innova-

tion investments, have broadened their skills of

taking advantage of the potential they have and

managing the risk they experience. Reduction of

investments in process innovations is a response

to uncertainty of the economic situation in 2011-

2012 (and coming years, since process innovations

will bring an added value in the longer perspec-

tive).

The view of SME innovativeness based on the

surveys shows the dichotomy of the sector. There

is quite a large group of companies that invest in

innovations and intend to continue to develop this

way. In addition, there is a large group of SME that

do not invest in innovations, provided that a vast

part of it is not aware of the importance of innova-

tions in the business operations.

Therefore the question is what would change

the attitude of these companies and make them

interested in investments in innovations and what

would increase the investment potential of SME,

which are innovators at present. Indications of all

SME subject to the survey are quite unambiguous

– demand, capital, competitors and knowledge.

They interfere slightly with information that are

disclosed by the companies not investing in in-

novations, which rank the demand and lack of fi-

nancing on the 4th and 3rd positions, respectively,

as the reasons of non-innovation approach.

According to all SME, the most important factor

that may affect the increase of their interest

in innovations stays beyond their control. It is

exogenous and a derivative of the economic

development level, salaries and situation on the

labor market. On the other hand, it should influ-

ence the facilitation of access to EU funds, both in

Poland and the European Union. However, it is to

be admitted that since the moment Poland joined

the EU back in 2004, when we started taking

advantage of the EU subsidies in compliance with

regulations applied to Member States, the access

to these grants has been improved. Yet, still if

we go for EU money, we need to be prepared for

the excessive bureaucracy, barriers and troubles.

Nonetheless, it is to be remembered that these

are public funds and the access to them will never

be comparable to the access to various “private”

resources. It seems that the greater problem is the

fact that entrepreneurs consider the EU subsidies

a chance to solve numerous problems they come

across. Actually, these funds dedicated to busi-

nesses are not intended to solve their problems,

49 In 2005 total

consumption rose by 2.7%, in 2006 – by 5.2%, in 2007 – by 4.6%

and in 2008 – by 6.1%. Gross National Product

in Q3 II 2011 – initial estimation, Polish Central

Statistical Office (GUS) 2011.



Awareness of researches conductedin various centers in Poland

Awareness of o innovative solutionsintroduced by competitors within a particular industry

Simplification of the access to EU funds in the EU

Simplification of the access to EU funds Poland

Demand on the Polish market

Access to favorable loans

Competitors recognized as other,more innovative companies

0 10 20 30 40 50 60 70

21.8

40.4

42.8

47.7

50.0

56.7

65.4

Diagram 114. Factors that would increase the company’s innovativeness – key factor and a considerable factor (% of SME)

Operations wihtin the EU and worldwide

Operations conducted nationwide

Operations within the region

6.7

24.9

68.1

33.6

34.737.1

23.5

31.750.5

73.5

12.43.1




Diagram 115. SME business priorities in 2 years to come (% of SME)

Diagram 116. SME business priorities in 2 years to come (% of SME by size )

p. 83p. 82

yet to establish conditions to carry out projects,

which, if based upon own assets of the companies,

would not be implemented and are definitely an

added value not only for the companies, but for

the entire economy.

A particularly significant information revealed

by SME is that the increase of innovativeness

is determined by competitors, meant as more

innovative companies. Such a statement from

entrepreneurs expresses explicitly that 50% of

SME reckon that innovations boost the capabil-

ity of enterprises to compete on the market and

enhance their competitive standing. Therefore, if

the population of companies making investments

in innovations expands, it will exert pressure upon

non-innovative businesses and act as a sweep-

ing “epidemic”. Hence, it is necessary to do the

utmost to make the number of SME-innovators

grow. This is the way they provide themselves

and the economy with the innovativeness growth.

Therefore it is necessary to set up numerous

financial instruments SME might us for establish-

ing investments in innovations. Furthermore, it is

necessary for SME to be given access to informa-

tion on innovative solutions, that are present on

the market as well as these research institutions

and universities work on. And, eventually, it is

indispensable to create a common ground for

cooperation of the science and business, that has

not been accomplished for years.

Without the aforesaid, probably the innovative-

ness of Polish SME would be rising, yet at a very

slow pace and thus it means a loss of many oppor-

tunities, which would let them bloom.

According to the data of the Polish Agency for

Enterprise Development (PARP) revealed in

the Report on small and medium companies50,

in 2010 there were 15 719 exporters in Poland,

including 13 798 small and medium enterprises.

They constituted 30% of total number of small

and medium companies and, at the same time,

4.5 / SME capacity – is the size of the Polish market a barrier?

nearly 88% of total number of exporters. Small

and medium exporters were almost equally di-

vided into the group of small businesses (50.3%)

and medium enterprises (49.7%). On the other

hand, the share of small and medium companies

in total export value was far lower, reaching

26.3% (nearly PLN 113 billion, i.e. approx. 10% of

sales revenues of small and medium

organizations) in 2010, including 6.1% and

20.2% corresponding to small and medium

companies, respectively.

The conclusion is that small and medium en-

terprises are fond of collaboration with foreign

business partners. We do not know how suc-

cessful the micro businesses are, yet due to the

size of its population, share of exporters within

the entire group is probably much lower as com-

pared to small and medium companies.

The analysis of results contained in “Monitor-

ing of the SME output in 2010-2012” shows

that merely 6.7% of micro, small and medium

enterprises are keen on business operations

outside Poland. When questioned about the

businesses priority in the 2 years to come (2012-

2013) – focusing on the local, Polish market, or

opening to the external markets – they point

out local markets they conduct their business

activities on. Of course, in numerous cases it is

reasonable, as the business profile is of regional

or national character, e.g. in terms of restau-

rants or traditional stores. However, there are

many enterprises that look for their opportuni-

ties to develop, taking up actions going beyond

the Polish borders. For instance, the companies

manufacturing building materials, specialized

windows, furniture.

As usually, there are significant differences

between micro, small and medium enterprises.

Nearly ¾ of micro businesses plan their opera-

tions in their geographical niche, the region

they conduct their business activities in. Merely

3% of them anticipate that, in 2 years to come,

they will also operate outside Poland. It is hard

to judge whether it reflects a full potential the

micro organizations hold. It seems that opportu-

nities stemmed from the quality, price and even

innovativeness of the products and services

provided by micro enterprises are huge, yet they

are not revealed in, for example, the capability

of facing up procedures to be familiarized with

and applied in order to be able to trade these

products and services on other markets.

In two years to come, 1/8 of small companies in-

tend to sell their goods and services outside the

territory of Poland. As far as medium enterpris-

es are concerned this percentage exceeds 1/3.

The situation could be much better. However,

the volume of our market is probably the “bar-

rier”, as it provides an opportunity to operate

50 http://www.parp.gov.pl/files/74/81/469/12554.pdf



0 20 40 60 80 100

65.9 28.7 5.5

73.1 23.3 3.6

62.5 26.9 10.6

81.6 9.5 8.9

33.0 36.3 30.7

77.6 19.7 2.8

63.1 33.6 3.3

80.6 17.4 2.0

57.3 31.3 11.4

Regionaloperations

Operations in the EU

and worldwide

Nationaloperations

(Poland)






Construction

Production



Diagram 117. SME business priorities in 2 years to come (% of SME by the economy section)




6.7

24.9

68.1

Exchange rate

Competitors*/

Different legal regulations

No funds

Acquisition of informationon foreign markets

Finding reliable businesspartners abroad

There is no need as the company tradesall its good on the Polish market

0 20 40 60

2.5 11.9

4.8 14.2

5.2 21.4

6.1 25.6

9.2 21.4

9.7 29.5

56.6 61.1

Top priority factor 3 most essential factors altogetherMaleFemale

7.8

1.6

28.7

16.8

63.5

81.5

Operations wihtinthe EU and worldwide

Operations conductednationwide

Operations withinthe region

Medium

Small

Micro

34.8

46.2

58.2

Diagram 118 (115). SME business priorities in 2 years to come (% of SME)

Diagram 120. Factors limiting the interest in exports */ (% of SME)

Diagram 119. SME business priorities in 2 years to come (% of SME by sex )

Diagram 121. Structure of responses: “There is no need as the company trades all its goods on the Polish market” (% of SME by size)

p. 85p. 84

and develop efficiently with no need to take up

extra risks related to cooperation with foreign

partners.

When analyzing the susceptibility of SME to

foreign expansion in terms of the economy sec-

tors, it is clearly seen that only the companies

operating in the transport area are exceptionally

oriented to collaborate commercially with the

EU (and globally). Access of Poland to the EU

stimulated establishing of numerous transport

businesses, that render services mostly on the

markets of the EU countries. For many of them

the European crisis in 2008-2009 was a particu-

larly serious challenge. Nonetheless, they had

to handle it, if the business priority to almost

1/3 of them is to operate on the EU and global

markets.

A relatively large number of SME operating in

the industry and information and communica-

tions also plans to extend their business activi-

ties beyond the Polish borders in the coming

2 years. It is a proof that the companies from

these sectors are strong and capable of compet-

ing, the feature that was remarked beforehand.

Companies operating in other areas character-

ize in extremely low susceptibility to foreign

expansion.

The majority of female companies conduct their

operations in the region. Their interest in nation-

al, and, certainly, foreign expansion is slight. This

is a considerable difference as compared to male

companies, most of which is also fond of opera-

tions within a particular region. Yet, in the latter

group there are nearly 30% less companies of

such an attitude as compared to female SME.

Male companies, almost 2 times more frequently

operate nationwide and nearly 5 times more

often – outside the territory of Poland.

The reasons of the diversification could lie

neither in the business profile, which enables

to trade everything the company manufacture

within the Polish market, nor in other, potentially

significant factors. The parallel percentage of

male and female companies presents the same

reasons of restricted interest in exports. The

reasons of limited operational range of female

companies could be found elsewhere, e.g. short-

er presence on the market and therefore lack of

stability allowing for planning of the expansion.

They might be also related to family duties, that

hamper development of the businesses.

Nevertheless, the question of low interest in

expansion to the foreign markets is reasonable

not only in terms of female companies, as the

entire SME sector shows only slight tendency to

develop in this direction. Therefore, the ques-

tion reappears whether it results from lack of

potential to compete on the external markets,

or the fear of entering the markets, they are not

familiar with, which generates great many sup-

plementary risks in their business activities.

The survey proves the former thesis that SME do

not search for new markets for their goods and

services, since the volume of the Polish market

and dynamics of consumption provides them

with the stable business in Poland. This factor is

given by all companies, irrespective of size. Yet,

in the event of medium companies, it is of lower

significance.

However, if we take a look at other factors limit-

ing the export interest, the problem is lack of

confidence, inability to acquire information on

foreign markets, different legal regulations as

well as the capital necessary for expansion pur-

poses. In terms of quoted barriers, the exchange

rate does not seem to be a vital issue, yet, today,

this is an effect of weak PLN, which is favorable

to exporters. The assessment of SME related to

the exchange rate might change, if PLN starts to

go up. Today, the problem to be faced up is vari-

ability of the PLN exchange rate.



16.6

9.8

2.8 3.8

56.6

10.3

40

30

60

50

20

10

0

Freemovementof goods

Freemovementof services

Freemovementof capital

Freedommovementfor workers

EU Common Market isnot important

Hard to say

50

60

7062.2

52.144.5

27.4

2.4

18.0

40

30

20

10

0Increase ofcompetitionon the Polishmarket

Necessity to rise salaries to the extentnotcorrespondingto the increaseof labor efficiencyin Poland

No employeesmovement ofworkers to EUlabor markets

Necessity topay the workersin accordancewith EUrenumerationsror the projectcarried out onthe EU markets

Other threats There are no threats

Hard to say

EU Common Marketis of no importance

Freedom of movement for workers

Free movements of capital

Free movements of services

Free movements of goods

8.87,8

10.7

37.945.5

58.2

4.14.63.7

5.62.02.9

9.511.7

9.6

34.028.4

14.9

Medium

Small

Micro

Diagram 123. How does the EU Common Market affect the company’s operations? Which of the freedoms is the most important (% of SME by size)

p. 87p. 86

The majority of SME reckons that after 7 years of

membership in the European Union, the Common

Market is not appreciated in terms of opportuni-

ties for business development. They think that the

Common Market is insignificant to them. When

analyzing advantages, they name those that result

from free movement of goods and free movement

of services. It means that SME continue to recog-

nize the EU market as the “foreign land”. Different

legal regulations in Member States, excessive bu-

reaucracy, that very often is supposed to protect

internal markets through external, yet EU-based,

competition, weakness of the common market of

services, transition periods related to freedom of

movement for workers. Only free movement of

capital is full, however enterprises, following the

crisis on financial markets, are actually afraid of.

The evaluation of Common Market significance is a

bit diversified when assessed from the perspective

of the companies varying in size. The larger the

organization, the more vulnerable to the benefits

4.6 / Low vulnerability of SME to take advantage of the EU Common Market

Diagram 122. How does the EU Common Market affect the company’s operations? Which of the freedoms is the most important? (% of SME)

Diagram 124. What are or might be the threats to the companies resulting from the Common Market? (% of SME, for which the Common Market is or might be important)

that might be obtained from the Common Market.

In addition, the larger the organization, the higher

recognition of importance referring to free move-

ment of goods. The reason is that a relatively

largest number of exporters is recruited among

medium companies. However, the assessment of

usefulness of free movement of services is not

diversified depending on the company’s size. This

diversification is not recognized while evaluating

other types of benefits, either.

SME, which claim that the Common Market is

important to business activities, are aware of op-

portunities and threats related to operations on

that market.

Most of all – when it comes to threats – they

reckon that operations on the Common Market

result in the increase of competitiveness on the

Polish market. Furthermore, according to them,

the threat is salaries, which have to be risen to the

extent that does not correspond to the increase of

a labor efficiency in Poland. Trade unions continu-

ously point out differences in remunerations on

the Polish market and the markets of the “old“ EU,

yet not taking into account sometimes vast differ-

ences in the labor efficiency.

In the period of prosperity in 2006-2007, enter-

prises, particularly SME, suffered severely from

deficiency of the staff holding relevant qualifica-

tions. It partially results from structural incoher-

ence, yet this is a consequence to some extent of

a freeedom of movement for workers. And this

is what SME also fear for. It can be clearly seen in

trends discussed in the Chapter 3.2 – a relatively

low susceptibility to hire new staff and a higher

inclination to rise salaries.

SME also notice many opportunities offered by the

Common Market. Issues, recognized as a threat

on the Polish market, are often considered an

opportunity on the EU markets. For instance, they



64.0

47.9

30.9 27.8

19.616.7

23.2

50

60

70

40

30

20

10

0Opportunity to trade products and serviceson 26 marketsof EU MemberStates incompliancewith the sameprinciples ason the Polish market

Opportunityto set upthe businesson other EUmarkets incompliancewith the sameprinciples ascitizens ofthese MemberStates

Easieracquiring ofthe investor

It providesno extraopportunities

Possibility tobe granted a loan on banks ofother EUMemberStates

Opportunityto takeadvantageof a qualifiedstaff from other EUMember States

Possibility to invest in otherbusinesses inEU Member States incompliancewith the sameprinciplesas citizens ofthese MemberStates

p. 89p. 88

Diagram 125. What are or might be the opportunities the companies may benefit from the Common Market? (% of SME, for which the Common Market is or might be important)

Scheme 9. Strengths and weaknesses of SME 2011

are afraid of the increase of competitiveness on

the Polish market, yet at the same time establish-

ing of business activities in other EU states, in

compliance with the same requirements as due

for citizens of these particular states, i.e. increas-

ing competitiveness, is treated as an asset. They

consider lack of employees a threat, however, they

simultaneously evaluate positively an opportunity

to take advantage of qualified labor from other EU

Member States.

Moreover, SME find free movement of capital

advantageous, including loans granted by banks

located in other EU countries or easier access to

the investor. Most of all they appreciate an op-

portunity to use free movement of goods, which

allows them for trading products and services on

the markets of 26 EU Member States, in accord-

ance with the same regulations as required for the

Polish market.

However, there are too few companies that are

able to take advantage of chances provided by

the Common Market. Undoubtedly, they have

to become aware of opening to the EU markets,

yet they need to be provided with information

and role models, that would show them certain

alternatives.

In the period of the economic downturn SME,

including particularly medium enterprises,

”have done their homework” well. They are

more self-active long-term, development-ori-

ented, focused on building up of competitive

advantages basing upon the quality, not the

price, considering more thoroughly the neces-

4.7 / Strengths and weaknesses of SME – summary

sity to invest in innovations.

However, there are loads of things to be

done, particularly in terms of awareness and

approach to innovations as well as sparking

higher interest in opportunities provided by

the cooperation with foreign business partners

and, most of all, the Common Market.

STRENGTHS

⁄ A relatively large number of SME is concerned about the development – they aim at increasing the market share, growing the company’s value, expanding sales. In the group of medium enterprises over 60% of entities share such an approach.

⁄ Medium enterprises have become a genuine "middle class" of the Polish sector of enterprises.

⁄ Quality of products is a crucial component contributing to the successful business, irrespective of the size of the company. The price is no longer the factor SME build up their competitive standing on.

⁄ High self-esteem of SME concerning the capability of competing on EU markets using the price, quality, innovativeness as well as promotion and distribution.

⁄ Nearly 2/3 of SME, regardless of the size, consider investments in innovations useful for development.

⁄ Medium enterprises, operating mostly in developing markets and featuring a relatively high susceptibility to innovations hold a greater expansion potential than smaller organizations.

⁄ Industrial companies operating in the information and communications sector have the largest development potential.

⁄ Approx. 50% of SME belong to the group of innovators.

⁄ Low susceptibility to take advantage of external funding (in the time of the economic slowdown).

WAEKNESSES

⁄ Nearly 60% of SME operating on shrinking markets are merely focused on survival and does not think about changes of the business profile.

⁄ Over 40% of micro companies are determined to survive and 1/8 recognize business activities basically as a workplace.

⁄ A relatively low inclination of micro and small businesses to innovations, including process innovations, in particular.

⁄ SME susceptibility to innovations is built up basing on the access to EU funds.

⁄ Misunderstanding of the significance of innovations in operations of enterprises that do not make investments in innovations (they reckon that the industry they operate in does not need innovations).

⁄ Over 50% of SME belong to the group of threatened or on the crossroads.

⁄ Low susceptibility to get involved into the cooperation with foreign business partners and, in consequence, ineffective use of the Common Market potential.

⁄ Female companies have definitely narrower development potential as compared to male companies. Over 60% of companies belong to the group of threatened or on the crossroads. The goal of the majority of these companies is to uphold on the market. A relatively large number of female companies conduct their business activities on shrinking markets. They are less prone to make investments. In most cases they operate on a local basis. They are marginally interested in cooperation with foreign entities.

MICRO, SMALL AND MEDIUM ENTERPRISES IN 2011



p. 91

Europe is getting worse. In Q1 2011 year-to-year

GDP growth in all EU Member States reached

2.4%, whereas in Q3 it amounted merely to

1.4%. The unemployment rate rose from 9.5%,

in the beginning of the year, up to 9.8% in No-

vember51. The dynamics of industry output and

retail go down. Export and import drop, too.

The inflation grows. Yet, most of all, despite

numerous proposals, there are no efficient so-

lutions to the excessive debt of EU economies.

It affects development opportunities of the

countries not suffering from insolvency, includ-

ing a negative influence on Poland.

External conditions determine fiercely an ex-

pansion of our economy – in the Q1 it reported

an increase of 4.5%. Q3 was slightly worse as

GDP grew by 4.2. Yet, still we are among the

leaders of the EU Member States, ranked 5th

in terms of GDP growth (following Baltic states

and Sweden). Industry output and retail soar

up. As at the end September 2011, Poland had

the largest number of employees working in

the state economy ever. However, simultane-

ously the unemployment rate was rising and

reached 11.8% in October. In November it

would probable exceed 12%. The inflation is

extremely high. PLN is weak, which is favorable

to exporters, yet it is subject to violent fluctua-

tions, strongly disapproved by entrepreneurs.

According to the survey of the SME sector

“SME – strengths and weaknesses. Develop-

ment opportunities and threats”, the inflation

is indicated by micro, small and medium busi-

nesses as an essential threat to their opera-

tions and ranked 7th among barriers limiting

expansion opportunities and influencing

negatively their economic situation (56.3% of

SME recognizes inflation as a hindrance and a

considerable hindrance). A significant threat to

the SME business activities is also a fluctuation

of the PLN/EUR exchange rate, taking the 13th

position in the ranking of obstacles (38.1%).

Inflation and the PLN exchange rate are key

factors affecting the interest rate, another vari-

able the enterprises consider essential.

The external environment, the companies have

to operate within, is worsening. And factors re-

lated to business activities, which substantially

determined the success of Polish enterprises

in the economic slowdown – conservatism in

finance management, low business leverage

level and concentration on the national market,

which result in a relatively low openness of the

Polish economy and an insignificant share of

exports in GDP, may not be sufficient to face up

another wave of the economic crisis. However,

until 2008 SME had made dramatic changes to

their business approach, shifting from focusing

heavily on the price in building up of the com-

petitive standing to targeting particularly at the

quality of goods and services52, while preserv-

ing a price advantage against competitors. In

2008 52% of SME pointed out the price as the

factor determining their competitive stand-

ing and less than 27% indicated the quality of

goods and services. The survey on SME carried

out this year [PKPP Lewiatan] shows a dramati-

cal reversing of priorities – 43.4% and 15.4% of

SME build up their competitive standing basing

upon the quality of goods and services and the

price, respectively. This alternative approach to

business operations, that had been started off

back in 2008, turned out to be such an efficient

strategy that even in the period of the crisis

(2008-2009), Polish companies did quite well

on the markets of our foreign business part-

ners, competing with the price and quality. This

is definitely a strength of SME. And it will be an

advantage in 2-3 years to come, as SME declare

that the quality of products will be the key to

success in the battle with competitors (42.8%

of SME).

However, the Polish economy as well as enter-

prises, including, most of all, micro, small and

medium businesses are about to face the chal-

lenge resulting not only from the second wave

of the economic downturn sweeping across Eu-

rope and worldwide and therefore stirring up

the necessity to establish skills related to risk

management in enterprises. Furthermore, they

have to respond to other challenges, including

a rising significance of human resources in the

economic process and need to professionalize

both management of labor and their compe-

tences. SME understands it perfectly. According

to the survey by PKPP Lewiatan, when asked

about priorities, a choice between investments

and professional development of workers and

acceptance of the staff rotation, they explicitly

and unanimously indicate investments in the

professional development of employees. Such

a selection is made by 76.2% of SME, irrespec-

tive of the company’s size (76.4% of micro busi-

nesses, 75.5% of small companies, 78.8% of

medium companies). It is tightly related to the

/ Conclusions

51Eurostat: Poland accord-ing to the Eurostat data – 9.9% – as of November 2011.52 „Monitoring of SME out-put 2008”, PKPP Lewiatan.

2.4%GDP growth in Q1 2011

in all EU Member States

1.4%GDP growth in Q3 2011

in all EU Member States

9.8%unemployment rate

in November 2011 in all EU Member States

4.2% GDP growth in Q3 2011

in Poland

We are the 5th European economy in terms of

GDP growth


Conclusions

p. 93

change of the business model – moving from

the price-based competition to quality-based

competition. In this model the key to success is

the employee’s experience – nearly 55% of SME

consider this feature the most often searched

competence (regardless of the size). This also

should be recognized as the strength of SME.

Yet, according to SME (as of the survey by

PKPP Lewiatan) the labor market and related

regulations are one of the most important

issues to be handled by the companies. Less

than 70% of SME reckon that non-payroll labor

expenses are a serious barrier in their opera-

tions. They rank it 3rd among regulation bar-

riers (following the VAT and CIT taxes). On the

other hand, since February 2012 the negative

influence of this factor upon business activities

will probably grow, as the government decided

to extend the budget through the increase of

the disability pension contribution paid by

entrepreneurs, from 4.5% up to 6.5%. In 2012,

it should bring approx. PLN 6-7 bilion to the

state treasure. It means that this is the amount

corresponding to the increase of costs and cut-

off of the profit (possibly deepening of the loss)

of the enterprises. This is an essential threat to

business operations of the companies, includ-

ing SME, in particular.

Another challenge to be faced up by enter-

prises is a necessity to optimize costs, resulting

from a – seemingly permanent – price inflation

tendency concerning resources, including fuel

prices, which affects each type of business

activities.

If the competitive advantages is based on the

quality of products, the alternatives referring

to cost cutting are not that large. It means that

the companies will have to accept a decreasing

profitability and depleting ability to gather cap-

ital for development purposes. This is another

threat to their expansion. Well, they might

take their chances, if they focus particularly on

investments in innovations. Today, innovative-

ness is a definitely a weakness of Polish en-

terprises. Even medium and large companies,

including those that operate in the industry,

which, by definition, should feature a relatively

high innovativeness, are not so prone to in-

novations – in 2009 barely 29.6% of industrial

companies 50+ allocated some expenses to

innovations53. The research on SME carried out

by PKPP Lewiatan proves that in 2008-2010

52.6% of SME launched at least one innovation

to their practices. And in most cases it referred

to medium enterprises. Product innovations

were dominant (introduced by 39.3% of SME).

Nearly 1/3 of SME also introduced marketing

innovations in 2008-2010. Process innovations

were of the least interest among SME. SME,

which did not make any investments in in-

novations in 2008-2010, when asked about the

reason of their non-interest, pointed out the

fact that they operate in the field that needed

no innovations (40%) and the scale of business

operations – 37% explained that they were too

small to go for it. Simultaneously, merely 6.7%

of the companies mentioned the risk related

to investments in innovations. Therefore the

survey showed explicitly that SME are still

unaware of what innovations are and might

be to their business operations. There is no

industry, in which innovations are not neces-

sary. Micro businesses need them, too. If not

applied, the real change of the business model

in Polish companies operating in the SME sec-

tor will not occur. This is the greatest weakness

of small and medium companies in Poland.

On the other hand SME opinion on usefulness

of innovative actions in the companies seems

optimistic, as majority (63.5%) of SME declares

that such introductions would be beneficial to

their organizations (no matter whether they

have already invested in innovations or not).

However, when comparing these statements

to SME plans on investments in innovations in

2011-2012 this optimism evaporated rapidly,

since 55.6% of businesses have invested or are

going to invest in innovations within this pe-

riod, which is slightly more than in 2008-2010.

And, the important thing is that nearly 1/3 less

companies invest and intend to invest in proc-

ess innovations, including new technologies

in the coming period (20.7% as compared to

29.5% of SME in 2008-2010). It means that it is

unlikely to reduce one of the most fundamen-

tal weaknesses of SME – low susceptibility to

innovations. In addition, for micro, small and

medium enterprises one of the most significant

factors, that might increase their innovative-

ness, is facilitation of access to EU funds (ac-

cess in Poland - 50% of SMA and direct access

in EU – 47.7% of SME). In fact, in the anticipat-

ed period (2007-2013) EU subsidies are nearing

to an end thus lack of grants will be a greater

problem than complicated access procedures.

53The Polish Central Statistical Office (GUS).

70% of SME reckon that non-payroll

labour expenses are a serious barrier

in their operations

52.6%the percentage of SME

that introduced at least one innovation to their

practices

Process innovations were the lowest priority among

SME investments


Conclusions

p. 95

Another weakness of SME is low involvement

in cooperation with foreign partners. The

truth is that small and medium companies (not

including micro businesses) make 87-88% of

total number of exporters, but at the same

time this is barely 30% of all small and medium

organizations [PARP]. Yet, nearly 62% of large

companies deal with exports. Actually, this is

not too much, however large enterprises make

73.7% of total export value. In 2010 small and

medium businesses traded abroad goods and

services equivalent to 26.3% of total exports.

It constituted almost PLN 113 billion, with

over ¾ and nearly ¼ generated by medium

and small companies, respectively. Due to the

SME survey, only 6.7% of SME reckon that the

business priority in the 2 years to come will be

operations within the EU and worldwide. How-

ever, approach to collaboration with foreign

partners is greatly diversified within the sector

as for more than 1/3 of medium companies the

business priority in the 2 years to come will be

operations within the EU and worldwide. It will

also be the priority for 12.4% of small business-

es and merely for 3.1% of micro enterprises.

The reason of such an insignificant inclination

to expansion broad is, according to the SME

subject to the survey (56.6%), an opportunity

to sell their total output on the Polish market.

The greatest threats to enterprises, includ-

ing SME in particular, lie in legal regulations

– unclear, non-transparent and not match-

ing altered management conditions – as well

as administrative procedures and costs they

imply, and difficult cooperation of businesses

with public institutions. The SME survey54

proves that the 4th and 5th position on the

list of greatest threats to SME operations and

development are taken by non-transparent

and ambiguous tax regulations, related to VAT

and CIT taxes. As far as these regulations are

concerned, the high level of ambiguity gener-

ates risks that affect the companies even in the

period of prosperity. Furthermore, SME pay

attention to severity of administrative proce-

dures and related expenditures. Simplification

of the tax laws and liquidation of numerous

unnecessary administrative obligations would

reduce not only the risk of SME business activi-

ties, but also cut their operational costs, includ-

ing operational costs of public institutions.

Therefore, enterprises are to perform lots of

work and, most of all, search for paths leading

to the increase of innovativeness and openness.

The government, the Parliament and public

administration are also facing up a lot of work.

However, firstly we need a political will to

implement changes that enhance environment

the companies operate within, including, most

of all, micro, small and medium businesses. We

do hope that the survey conducted by PKPP

Lewiatan as well as its results, recognized as a

sum of “collected wisdom of SME” will inspire

the government to act towards such an im-

provement.

54 PKPP Lewiatan. 6,7%

the percentage of SME reckoning that the business

priority in the 2 years to come will be operatons

within the EU and worldwide

The reason of such an insignificant inclination

to expansion broad is, according to the SME subject to the survey

(56.6%), an opportunity to sell their total output on the Polish market


Conclusions

p. 97p. 96

LIST OF CHARTS

Chart 1. Number of entities participating in the research, according to GUS in 2011, by number of employed and selected sections of PKD 2007

Chart 2. Number of entities participating in the research, according to GUS in 2011, by provinces

Chart 3. Scheduled sample size by section of PKD 2007 and groups of number of employed

Chart 4. Scheduled sample size by provinces

Chart 5. Sample quantity summary (for Dolnośląskie province)

Chart 6. Number of enterprises subject to the survey by size classes and their share in the total population having been examined (raw data)

Chart 7. Number of enterprises subject to the survey by sections of PKD 2007 (raw data)

Chart 8. Legal form of surveyed enterprises (% share in the examined population)

Chart 9. Turnover (range) of surveyed enterprises in 2010

Chart 10. Procedures for settlement with the Tax Office referring to enterprises subject to the survey

Chart 11. Educational background of owners of enterprises subject to the survey

Chart 12. Educational background of the management team of enterprises subject to the survey

Chart 13. Position of the respondent in enterprises subject to the survey

Chart 14. Number of enterprises subject to the survey by the sex of the owner and managing person (% of SME)

LIST OF DIAGRAMS

Diagram 1. Changes in SME operations in 2010 as compared to 2009 (% of SME)

Diagram 2. SME forecasts on fluctuation in operations of enterprises in 2011 as compared to 2010 (% of SME)

Diagram 3. Changes in sales revenues of SME in 2010 as compared to 2009 (% of SME by the size)

Diagram 4. SME forecasts of sales revenues in 2011 as compared to 2010 (% of SME by the size)

Diagram 5. SME profit fluctuations in 2010 as compared to 2009 (% of SME by the size)

Diagram 6. SME forecasts of profit fluctuations in 2011 as compared to 2010 (% of SME by the size)

Diagram 7. Changes in SME market share in 2010 as compared to 2009 (% of SME by the size)

Diagram 8. SME forecasts of changes in market share in 2011 as compared to 2010 (% of SME by the size)

Diagram 9. Changes in SME sales in 2010 as compared to 2009 (% of SME by the economy sector)

Diagram10. ME forecasts on fluctuations of sales revenues in 2011 as compared to 2010(% of SME by the economy sector)

Diagram 11. Changes in SME operations in 2010 as compared to 2009 r. (% of SME by sex – female companies)

Diagram 12. Changes in SME operations in 2010 as compared to 2009 r. (% of SME by sex – male companies)

Diagram 13. SME forecasts on fluctuation in operations in 2011 as compared to 2010 (% of SME by the sex – female companies)

Diagram 14. SME forecasts on fluctuation in operations in 2011 as compared to 2010 (%of SME by the sex – male companies)

Diagram 15. Fluctuations of SME sales revenues, SME forecasts on changes of revenues, GDP dynamics in 2004-2011 (% of SME; % of GDP)

Diagram 16. Fluctuations of profit, SME forecasts on profit changes and GDP dynamics in 2004-2011 (% of SME; % of GDP)

Diagram 17. Changes of employment and remunerations in SME in 2010 as compared to 2009 (% of SME)

Diagram 18. SME forecasts on changes of employment and remunerations in 2011 as com-pared to 2010 (% of SME)

Diagram 19. Changes of employment in SME in 2010 as compared to 2009 (% of SME by size)

Diagram 20. SME forecasts on changes in employment in 2011 as compared to 2010 (% of SME by size)

Diagram 21. Changes of remunerations in SME in 2010 as compared to 2009 (% of SME by size)

Diagram 22. SME forecasts on changes in remunerations in 2011 as compared to 2010 (% of SME by size)

Diagram 23. Changes of employment in SME in 2010 as compared to 2009 and forecasts on changes of employment in 2011 as compared to 2010 (% of SME by sex – female companies)

Diagram 24. Changes of employment in SME in 2010 as compared to 2009 and forecasts on changes of employment in 2011 as compared to 2010 (% of SME by sex – male companies)

p. 99p. 98

Diagram 25. Changes of remunerations in SME in 2010 as compared to 2009 and forecasts on changes of remunerations in 2011 as compared to 2010 (% of SME by sex – female companies)

Diagram 26. Changes of remunerations in SME in 2010 as compared to 2009 and forecasts on changes of remunerations in 2011 as compared to 2010 (% of SME by sex – male companies)

Diagram 27. Changes in investment expenditures in 2010 as compared to 2009 (% of SME)

Diagram 28. SME forecasts on changes in investment expenditures in 2010 as compared to 2009 (% of SME)

Diagram 29. SME forecasts on changes in expenditures on investments enhancing produc-tion capabilities in 2011 as compared to 2010 (% of SME by size)

Diagram 30. SME forecasts on changes in expenditures on investments modernizing fixed assets in 2011 as compared to do 2010 (% of SME by size)

Diagram 31. SME forecasts on changes in expenditures on investments enhancing production capabilities in 2011 as compared to do 2010 (% of SME by the economy sector)

Diagram 32. SME forecasts on changes in expenditures on investments modernizing fixed assets in 2011 as compared to do 2010 (% of SME by the economy sector)

Diagram33. The capacity rate of used technological resources (% of used capacity; SME by size)

Diagram 34. SME forecasts of sales revenues in 2011 as compared to 2010 (% of SME by size)

Diagram 35 The capacity rate of used technological resources (% of used capacity; by the economy sector)

Diagram 36. SME forecasts on fluctuations of sales revenue in 2011 as compared to 2010 (% of used capacity; by the economy sector)

Diagram 37. The capacity rate of used technological resources (% of used capacity; SME by regions)

Diagram 38. SME forecasts on fluctuations of sales revenue in 2011 as compared to 2010 (% of used capacity; SME by regions)

Diagram 39. SME forecasts on the increase of investment expenditures in 2011 as compared to 2010 (% of SME; by regions)

Diagram 40. Changes in SME investment expenditures in 2010 as compared to 2009 and forecast on fluctuations in investment expenditures in 2011 as compared to 2010 (% of SME by sex - "female" companies)

Diagram 41. Changes in SME investment expenditures in 2010 as compared to 2009 and forecast on fluctuations in investment expenditures in 2011 as compared to 2010 (% of SME by sex - "male" companies)

Diagram 42. Changes of SME investment expenditures on R&D and innovations in 2010 as compared to 2009 (% of SME)

Diagram 43. SME forecasts on changes in investment expenditures on R&D and innovations in 2011 as compared to 2010 (% of SME)

Diagram 44. SME forecasts on increase of investment expenditures on R&D and innovations in 2011 as compared to 2010 (% of SME by size)

Diagram 45. SME forecasts on increase of investment expenditures on R&D and innovations in 2011 as compared to 2010 (% of SME by the economy section)

Diagram 46. Forecasts on changes in investment expenditures on R&D and innovations in 2011 as compared to 2010 (% of SME by sex – female companies)

Diagram 47. Forecasts on changes in investment expenditures on R&D and innovations in 2011 as compared to 2010 (% of SME by sex – male companies)

Diagram 48. Changes of bank debts in 2010 as compared to 2009 (% of SME)

Diagram 49. SME forecasts on debt fluctuations in 2011 as compared to 2010 (% of SME)

Diagram 50. Changes in the use of leasing in 2010 as compared to 2009 (% of SME)

Diagram 51. SME forecasts on changes in the use of leasing in 2011 as compared to 2010 (% of SME)

Diagram 52. SME forecasts on bank debt fluctuations in 2011 as compared to 2010 (% of SME by size)

Diagram 53. SME forecasts on fluctuations in the use of leasing in 2011 as compared to 2010 (% of SME by size)

Diagram 54. SME forecasts on bank debt fluctuations in 2011 as compared to 2010 (% of SME by the economy section)

Diagram 55. SME forecasts on fluctuations In the use of leasing in 2011 as compared to 2010 (% of SME by the economy section)

Diagram 56. Influence of the loan access and the use of leasing upon development opportu-nities and the economic situation of companies (% of SME)

Diagram 57. Cooperation with banks – influence on development opportunities and econo-mic and financial situation of the company (% of SME by size)

Diagram 58. Loan access – influence on development opportunities and economic and financial situation of the company (% of SME by size)

Diagram 59. Leasing conditions - influence on development opportunities and economic and financial situation of the company (% of SME by size)

Diagram 60. Cooperation with banks – influence on development opportunities and economic and financial situation of the company (% of SME by the economy section)

Diagram 61. Loan access – influence on development opportunities and economic and financial situation of the company (% of SME by the economy section)

Diagram 62. Leasing conditions - influence on development opportunities and economic and financial situation of the company (% of SME by the economy section)

p. 101p. 100

Diagram 63. SME forecasts on fluctuations in bank debts and the use of leasing in 2011 as compared to 2010 (% of SME by sex – female companies)

Diagram 64. SME forecasts on fluctuations in bank debts and the use of leasing in 2011 as compared to 2010 (% of SME by sex – male companies)

Diagram 65. Loan access and leasing conditions – influence on development opportunities and economic and financial situation of the company (% of SME by sex – female companies)

Diagram 66. Loan access and leasing conditions – influence on development opportunities and economic and financial situation of the company (% of SME by sex – male companies)

Diagram 67. Upholding on the market versus types of SME (% of SME)

Diagram 68. Strategic goal (% of SME)

Diagram 69. Strategic goal (% of LARGE enterprises)

Diagram 70. Strategic goal (% of MICRO enterprises)

Diagram 71. Strategic goal (% of SMALL enterprises)

Diagram 72. Strategic goal (% of MEDIUM enterprises)

Diagram 73. Strategic goal (% of LARGE enterprises)

Diagram 74. Strategic goal (% of SME by sex – female companies)

Diagram 75. Strategic goal (% of SME by sex – male companies)

Diagram 76. Opportunities of the industry growth (% of SME)

Diagram 77. Opportunities of the industry growth (% of MICRO enterprises)

Diagram 78. Opportunities of the industry growth (% of SMALL enterprises)

Diagram 79. Opportunities of the industry growth (% of MEDIUM enterprises)

Diagram 80. Opportunities of the industry growth (% of SME by sex – female companies)

Diagram 81. Opportunities of the industry growth (% of SME by sex – male companies)

Diagram 82. Strategic goals implemented by SME on various markets of diversified develop-ment potential (% of SME)

Diagram 83. Opportunities of the industry growth (% of SME by the economy section)

Diagram 84. Factors determining competitiveness of SME in 2004-2008 (% of SME)

Diagram 85. Factors contributing to a current competitive standing of SME (% of SME)

Diagram 86. Factors building up current position of SME on the market – top priority factor (% of SME by size)

Diagram 87. Factors contributing to a current competitive standing the factor considered the top priority (% of SME by the economy section)

Diagram 88. Factors determining SME competitiveness in 2004-2008 and 2011 (% of SME total) /1/

Diagram 89. Factors determining SME competitiveness in 2004-2008 and 2011 (% of SME) /2/

Diagram 90. Factors that will build up a competitive position of the company within 2-3 years to come – top priority factor (% of SME)

Diagram 91. Factors that will build up a competitive position of the company within 2-3 years to come – top priority factor and 3 top priority factors altogether (% of SME)

Diagram 92. Factors that will build up a competitive position of the company within 2-3 years to come – top priority factor (% of SME by sex – female companies)

Diagram 93. Factors that will build up a competitive position of the company within 2-3 years to come – top priority factor (% of SME by sex – male companies)

Diagram 94. Percentage of companies, which implemented innovative practices in 2008-2010 (% of SME)

Diagram 95. SME implementing process innovations in 2008-2010 (% of SME by size)

Diagram 96. SME implementing product innovations in 2008-2010 (% of SME by size)

Diagram 97. SME implementing organizational innovations in 2008-2010 (% of SME by size)

Diagram 98. SME implementing marketing innovations in 2008-2010 (% of SME by size)

Diagram 99. Percentage of companies, which implemented innovative practices in 2008-2010 (% of SME by sex – female companies)

Diagram 100. Percentage of companies, which implemented innovative practices in 2008-2010 (% of SME by sex – male companies)

Diagram 101. Reasons of non-interest in innovations (% of SME, which have not launched any innovations (more than one pick acceptable)

Diagram 102. Reasons of non-interest in innovations (% of SME, which have not launched any innovations, by size)

Diagram 103. Reasons of non-interest in innovations (% of SME, which have not launched any innovations, by the economy section)

Diagram 104. Regardless of whether the company invests in innovations, will the innovative actions be favorable to it (2011; % of SME)

Diagram 105. Regardless of whether the company invests in innovations, will innovative actions be favorable to it (2011, micro businesses, %)

Diagram 106. Regardless of whether the company invests in innovations, will innovative actions be favorable to it (2011, small businesses, %)

p. 103p. 102

Diagram 107. Regardless of whether the company invests in innovations, will innovative actions be favorable to it (2011, medium businesses, %)

Diagram 108. Regardless of whether the company invests in innovations, will innovative actions be favorable to it (2011, % of SME by sex – female companies)

Diagram 109. Regardless of whether the company invests in innovations, will innovative actions be favorable to it (2011, % of SME by sex – male companies)




Diagram 113. Does your company intend to launch any innovations in 2011-2012? (data compared with SME that introduced innovations in 2008-2010; % of SME)

Diagram 114. Factors that would increase the company’s innovativeness - key factor and a considerable factor (% of SME)


Diagram 116. SME business priorities in 2 years to come (% of SME by size)

Diagram 117. SME business priorities in 2 years to come in 2 years to come (% of SME by the economy section)


Diagram 119. SME business priorities in 2 years to come (% of SME by sex)

Diagram 120. Factors limiting the interest in exports (% of SME)

Diagram 121. Structure of responses: “There is no need as the company trades all its goods on the Polish market” (% of SME by size)

Diagram 122. How does the EU Common Market affect the company’s operations? Which of the freedoms is the most important? (% of SME)

Diagram 123. How does the EU Common Market affect the company’s operations? Which of the freedoms is the most important? (% of SME by size)

Diagram 124. What are or might be the threats to the companies resulting from the Common Market? (% of SME, for which the Common Market is or might be important)

Diagram 125. What are or might be the opportunities the companies may benefit from the Common Market? (% of SME, for which the Common Market is or might be important)

LIST OF SCHEMES

Scheme 1. Characteristics of SME basing on operations in 2010 and plans for 2011

Scheme 2. SME typology basing on the plans for 2011 – description

Scheme 3. Types of MSP versus strategic goals (% of SME)

Scheme 4. Types of SME by size (% of SME)

Scheme 5. Types of SME by economy section (% of SME)

Scheme 6. Types of SME by sex (% of SME)

Scheme 7. Comparison of products and services manufactured by Polish SME to their EU counterparts (% of SME)

Scheme 8. SME, which implemented process, products, organizational and marketing innovations in 2008-2010 (% of SME by economy section )

Scheme 9. Strengths and weaknesses of SME 2011

advantages and disadvantages of micro...

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